AVM.L Regulatory News (AVM)

31 Oct 2007 07:01

Avocet Mining PLC31 October 2007 News Release For Immediate Release Date 31st October 2007 Avocet Mining PLC 7th Floor 9 Berkeley Street London W1J 8DW Tel +44 (0) 20 7907 9000 Fax +44 (0) 20 7907 9019 E-mail avocetmining@avocet.co.uk www.avocet.co.uk Q2 AND FIRST HALF GOLD PRODUCTION - CONTINUING OPERATIONS UP 12%, CASH COSTS DOWN 16% Second quarter Avocet Mining PLC ("Avocet" or "the Company") announces gold production of44,028 ounces for the second quarter ended 30 September 2007 at a cash cost ofUS$289/oz. This compares with 47,171 ounces at US$426/oz for the same periodlast year which included 7,819 ounces from the ZGC mine disposed on 9 July 2007. On a like for like basis, second quarter gold production from continuingoperations at Penjom in Malaysia and North Lanut in Indonesia was up 12% at44,028 ounces compared with 39,352 ounces for the corresponding period lastyear. Cash costs from continuing operations were also better at US$289/oz, 16%lower than the prior year of US$346/oz. First half year These results follow the improving trend in performance at Avocet's continuingoperations compared with last year, with management initiatives at both Penjomand North Lanut generating increased efficiencies. Production and costs for thefirst half of this year from continuing operations show a similar year on yearimprovement to the quarterly trend, with production up 12% at 82,830 ounces andcash costs down 18% at US$294/oz, compared with the first half of last year whenproduction was 74,238 ounces at a cash cost of US$359/oz. The 12% year on year increase in production in the first half reflects aparticularly strong performance at North Lanut where the introduction of allweather haul trucks allowed the operation to take full advantage ofsignificantly higher grades currently being mined with first half production up66% from the prior year at 38,866 ounces. At Penjom production of 43,964 ounceswas 13% lower than last year when a greater proportion of higher gradestockpiles was available for processing. The grade of ore mined at Penjom inthe first half of this year was equal to the grade mined in the correspondingperiod last year. Penjom's cost per ounce fell from US$370/oz to US$320/oz. Costs remain underpressure from higher royalties linked to the gold price and from the continuingrise in fuel, reagents, and other costs that have led to some analystsestimating average costs for the gold mining industry in the range ofUS$375-US$400/oz. However, efficiencies from the mine's new haul fleet andother operational initiatives enabled Penjom to offset these increases and keepits mining cost per tonne flat. As a result, and despite lower production, cashcosts per ounce were maintained in line with the prior year, before adjustmentfor deferred stripping. With the pit expansion in progress, the waste-to-orestripping ratio for the half year was 31:1 which exceeded the life of mineaverage of 22.5:1, and excess stripping costs of US$2.4 million were deferred,equivalent to US$54/oz. Cash costs at North Lanut of US$265/oz were 21% betterthan the prior year reflecting higher production as well as targetedimprovements in haulage productivity, drilling and the use of emulsionexplosives to achieve better fragmentation in blasting operations. Avocet's interim results will be released on 14 November. These will beprepared for the first time under International Financial Reporting Standards(IFRS), and will feature certain fair value adjustments including a mark tomarket adjustment of the Company's gold collar, in addition to the impacts ofthe previously announced disposal of ZGC in Tajikistan and the divestment of theBuffalo Reef prospect in Malaysia. Jonathan Henry, Chief Executive Officer, commented: "Q2 was another strong quarter in terms of our delivery on operationalperformance. In a year in which industry average cash costs are expected toreach in the region of US$400/oz, it is particularly pleasing to be able toreport cash costs that are in the lowest quartile, as well as increasingproduction from our continuing operations." ________________________________________________________________________________________________________________________ For further information please contact: Avocet Mining PLC Buchanan Communication Grant Thornton Corporate FinanceJonathan Henry, Chief Executive Officer Bobby Morse, Partner Fiona KindnessMike Norris, Finance Director Ben Willey, Director 020 7728 3414020 7907 9000 020 7466 5000www.avocet.co.uk www.buchanan.uk.com www.grant-thornton.co.uk 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 advanced miningand exploration projects in South East Asia and owns significant interests inDynasty Gold and Monument Mining, both Toronto Venture Exchange listed companieswith interests in Western China and Malaysia, respectively. This information is provided by RNS The company news service from the London Stock Exchange