AVM.L Regulatory News (AVM)

Avocet Mining Unaudited Interim Results for thesix months ended 30 June 2012

2012 SECOND QUARTER HIGHLIGHTS

·; Gold production of 32,917 oz. (Q1 2012: 38,296 oz.)

·; Cash costs US$1,006 per oz. (Q1 2012: US$850 per oz.)

·; Net cash generated by operating activities of US$20.7 million (Q1 2012: US$13.9 million)

·; Average realised gold price of US$1,439 per oz. (Q1 2012: US$1,543 per oz.)

·; EBITDA of US$8.7 million (Q1 2012: US$28.1 million)

·; Cash of US$80.4 million, with external debt reduced to US$17.0 million

·; No dividend to be paid in respect of the 2012 financial year

CORPORATE AND OPERATIONAL UPDATE

·; David Cather appointed CEO and subsequently Executive Director, following resignation of Brett Richards

·; Operational review by Alexander Proudfoot completed; operational improvements identified

·; On-site management team strengthened

·; Scoping study on Inata expansion, including metallurgical test work results, expected to be completed in Q3 2012

KEY FINANCIAL METRICS[1]

[1] Key Financial Metrics are presented for continuing operations only, and represent results excluding the Group's former operations in South East Asia, which were sold in June 2011. Refer to note 2 of these interim financial statements for further information.

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

David Cather, Chief Executive Officer, commented:

"When I joined Avocet in May 2012, my key objective was to understand the operating challenges at Inata. My appointment as Chief Executive officer has allowed me to put this objective at the core of the Company's strategy. The immediate challenges relate to refining our understanding of the Inata orebody, and ensuring mining and plant operations are optimised to deliver the maximum value to shareholders. In addition, we will look to expand the Inata Mine to its optimal processing capacity and to advance our assets in Guinea. Our intention remains to grow Avocet into a leading West African gold mining and exploration company."

FOR FURTHER INFORMATION PLEASE CONTACT

NOTES TO EDITORS

Avocet Mining is a 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. The deposit at Inata currently comprises a Mineral Resource of 3.46 million ounces and a Mineral Reserve of 1.85 million ounces. The Inata Gold Mine poured its first gold in December 2009 and produced 167,000 ounces of gold in 2011 and is expected to produce 135,000 - 140,000 ounces of gold in 2012.

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 at Souma, some 20 kilometres from the Inata Gold Mine, where a Mineral Resource of 0.56 million ounces exists.

In Guinea, Avocet owns twelve exploration licenses in the north east of the country. Mineral Resource development has been ongoing since 2005 and the project at Tri-K is the most advanced. Within the Tri-K project, Koulékoun has a Mineral Resource of 1.83 million ounces and Kodiéran of 0.4 million ounces.

CHIEF EXECUTIVE OFFICER'S REVIEW

The second quarter of 2012 was a challenging period for the Company. As reported in our trading update of 29 June 2012, production and cash costs at the Inata Gold Mine were weaker than forecast and the scoping study on an expansion at Inata has taken longer than anticipated.

In response to this, the Company has taken a number of steps to refocus its strategy in order to achieve operational excellence at Inata.

Measures are being taken to improve mining capacity and operating efficiencies. African Mining Services has been contracted to provide two rental excavators and four dump trucks, while a new wheeled loader has been purchased and is in transit to the mine. All seven are expected at site in September. The purchase of a fourth mining fleet will be put on hold pending the implementation of recommendations from Alexander Proudfoot to enhance the efficiency of the existing fleet. During July, a team from Alexander Proudfoot management consultants conducted a three week business review, including a comprehensive analysis of operations. This review and the resulting recommendations will quantify performance improvement opportunities to enhance efficiencies and reduce costs. Management and Alexander Proudfoot will jointly compile a detailed plan to achieve these desired results over the coming months.

The on-site management team has been expanded with the appointment of a new general manager, mine manager and a technical services manager. The new general manager, John McNair, is an engineer with over 30 years relevant experience.

Metallurgical test work continues, with a view to determining an optimal plant configuration suitable for processing ore from across the Inata ore body. Test work results and consultants' reports are scheduled for internal review in August, following which engineering and mine planning will commence in order to finalise life of mine plans. Further information on the expansion will be communicated following completion of these studies.

In anticipation of Inata's existing project finance facility being fully repaid by March 2013, discussions are in progress with various lenders with a view to replacing the existing facility. This new financing facility will be used for standby and Inata development purposes. The amount of funding required for Inata development will depend on the outcome of the ongoing studies outlined above. Finalisation of financing for the Inata development is therefore not expected to be completed until the end of 2012. In the meantime, the Company has US$63m of net cash.

In the recent trading update, the annual production guidance was lowered to between 135,000 and 140,000 ounces at cash costs of US$1,000-1,050 per ounce for 2012. In response to this weaker performance the Board has taken the decision to pay no dividend in respect of the 2012 financial year. The Company will look to resume dividends for subsequent years subject to assessment of growth plans and operating performance.

The Company's exploration field season will end shortly in Guinea and Burkina Faso. Exploration in Burkina Faso has progressed ahead of schedule and drilling of Koulékoun and Kodiéran in Guinea is complete. Resource modelling will take place during the wet season, followed by resource and reserve updates as appropriate. Year to date the Company has invested US$15.3 million and US$6.7 million in resource development in Burkina Faso and Guinea respectively. With no fieldwork over the next few months, exploration expenditure in Guinea and Burkina Faso is expected to be significantly less in the second half of the year.

Realised gold prices were approximately US$100/oz. lower than in Q1 2012, as the spot gold price moved from US$1,677 on 2 April to US$1,553 on 29 June 2012.

OPERATIONAL REVIEW

Gold production and cash costs

Gold production in Q2 2012 was 32,917, down 14% from Q1, predominantly due to lower head grades. Mining volumes were 7% lower than Q1, reflecting continued poor availability of excavators and loaders, which caused waste stripping to fall behind schedule. As a consequence, areas of higher grades in the pit were not accessed in the period and head grades consequently fell to 1.82 grammes per tonne.

Throughput in the plant increased to 651,000 tonnes in Q2 compared with 608,000 tonnes in the previous quarter, partly reflecting scheduled maintenance in the first quarter. Recoveries of 86% were in line with 87% achieved in Q1 2012. Recoveries continue to be impacted by the presence of preg-robbing carbon. Mining for the remainder of the year is scheduled to be primarily in oxide material, where the presence of preg-robbing carbon is limited. Accordingly, recoveries are expected to improve.

As part of the process to deal more effectively with the preg-robbing carbon in the Inata ore body, good progress has been made with the modelling of organic carbon, sulphides and other indicator elements across the ore body. These models will enable us to define more fully the metallurgical character of the oxide, transitional and fresh ores at Inata. This will allow mining and processing schedules to be optimised and will also form the basis of the detailed design of the proposed plant expansion once the scoping study is complete.

Cash costs rose from US$850 per ounce in Q1 2012 to US$1,006 in Q2, largely due to the decrease in gold production. Although mining volumes were lower following availability issues, the cost of maintenance on the mining fleet, combined with longer haul cycles, meant that mining costs increased on a per tonne basis from US$1.63 to US$1.81. Plant costs remained at approximately US$17 per tonne processed. Mine administration costs remained flat at just under US$5 million for the quarter.

Exploration

Exploration on the Bélahouro permits has progressed ahead of plan. The entire 2012 geochemical auger sampling programme is complete and assays are awaited. Resource drilling has progressed ahead of schedule, and the completion of the programme at Inata will result in an updated Mineral Resource by the end of the third quarter. Drilling has also commenced ahead of schedule at Souma. Initially this is aimed at upgrading the Inferred Mineral Resource defined in 2010 in support of reserve estimation and life of mine planning in the fourth quarter.

In Guinea, there have been no further developments regarding changes to the mining code. With no fieldwork over the next few months, expenditure in Guinea will be minimal and the Company will provide updates on development as they arise.

FINANCIAL REVIEW

The Group is committed to publishing interim management information on a quarterly basis. Accordingly, this review focuses on the performance during Q2 2012 but also makes reference to the six month interim period to 30 June 2012. A commentary on the performance of Q1 2012 was reported in the announcement made on 3 May 2012.

Revenue of US$49.3 million in the quarter represented 34,218 ounces of gold sold at an average realised price of US$1,439 per ounce (including 8,250 ounces into forward contracts at US$950 per ounce), compared to 39,064 ounces at US$1,543 per ounce in Q1. Revenue in the six month period ended 30 June 2012 was US$109.5 million, compared to US$100.5 million from continuing operations in the comparative period.

EBITDA for the quarter totalled US$8.7 million, compared to US$28.1 million in the previous quarter. However, favourable working capital movements meant that cashflow from operating activities was US$20.7 million, compared to US$13.9 million in Q1 2012.

The balance of the Macquarie Bank Limited debt reduced to US$17.0 million by 30 June 2012, and with a cash balance of US$80.4m, net cash was US$63.4m, compared with US$77.5 million at 31 March 2012. The final dividend for 2011 of US$13.2 million was paid in June 2012.

OUTLOOK

During the remainder of 2012 the Company's primary focus will be on improving Inata's operational performance. Gold production for the next six months is forecast to be between 64,000 and 69,000 ounces, with the fourth quarter representing more than half of this total due to the expected sequencing of mined grades.

Mining rates will benefit from the additional rented equipment discussed above, while operational and cost efficiencies will be targeted in conjunction with mining consultants Alexander Proudfoot. Recoveries are expected to be above current levels for the remainder of 2012 and into 2013 as mill feed comprises a higher proportion of oxide material.

Once the metallurgical test work results are received and the scoping study on the Inata expansion is complete, the priority will be to establish the appropriate plant configuration for this expansion Discussions are ongoing with several banks as well as equipment suppliers to ensure that the necessary funding for this expansion will be in place.

Avocet staff are fully committed to addressing performance issues and making sustainable improvements. These efforts will be led by the new General Manager and new Mine Manager that have been appointed to align the skill set of the mine's management with the challenges that the operation currently faces.

Following Brett Richards' resignation on 18 July, I will now be leading the Company's drive to achieve operational excellence from the position of CEO. In this capacity, my focus will be on ensuring Avocet delivers on its guidance for the remainder of 2012 and 2013 and that the studies on an expansion at Inata are satisfactorily concluded.

DAVID CATHER

Chief Executive Officer

PRINCIPAL BUSINESS RISKS

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Directors do not consider that the principal risks and uncertainties have changed materially since the publication of the Annual Report and Accounts for the year ended 31 December 2011. The principal risks faced by Avocet relate to operational risks at Inata (including the performance of the mining and plant operations, the metallurgy of the ore body, and the impact of preg-robbing on recoveries); political risks in Burkina Faso, Guinea and Mali; and risks related to the funding of Avocet's growth strategy in the context of uncertain markets. A detailed explanation of these risks can be found on pages 48 and 49 of Avocet's 2011 Annual Report and Accounts, which can be downloaded from Avocet's website www.avocetmining.com This commentary is provided in accordance with Rule 4.2.7 of the Disclosure and Transparency Rules.

DIRECTORS RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

·; The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU;

·; The interim management report includes a fair review of the information required by:

i) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

ii) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board

DAVID CATHER MIKE NORRIS

Chief Executive Officer Finance Director

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF AVOCET MINING PLC

Introduction

We have reviewed the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 which comprises condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company's members, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company's members those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company's members as a body, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

GRANT THORNTON UK LLP

AUDITOR

London

1 August 2012

(1) During 2011, the Group disposed of all of its trading subsidiaries which were classified as discontinued operations. All operations for 2012 are continuing. Refer to note 2 for further information.

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

(1) During 2011, the Group disposed of all of its trading subsidiaries which were classified as discontinued operations. All operations for 2012 are continuing. In Q1 2012 the Group completed the disposal of one of the remaining exploration assets in South East Asia. Refer to note 2 for further information.

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of preparation

The condensed consolidated interim financial statements, which are unaudited, have been prepared in accordance with the requirements of International Accounting Standard 34 as adopted for use in the European Union. This condensed interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this condensed report is to be read in conjunction with the Annual Report for the year ended 31 December 2011, which has been prepared in accordance with IFRS as adopted by the European Union, and any public announcements made by the Group during the interim reporting period.

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The unaudited condensed financial statements for the six months ended 30 June 2012 have been drawn up using accounting policies and presentation expected to be adopted in the Group's full financial statements for the year ending 31 December 2012, which are not expected to be significantly different to those set out in note 1 to the Group's audited financial statements for the year ended 31 December 2011.

The Company's statutory financial statements for the year ended 31 December 2011 are available on the Company's website www.avocetmining.com. The auditor's report on those financial statements was unqualified and did not contain a statement under sections 498(2) or (3) of the Companies Act 2006.

After review of the Group's operations, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the unaudited condensed interim financial statements.

2. Disposal group classified as held for sale and discontinued operations

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. In the third quarter of 2011, Avocet announced that further sales had been concluded, namely PT Avocet Mining Services, Avocet Mining (Malaysia) OHQ Sdn. Bhd., its 75% interest in PT Gorontalo Sejahtera Mining, and its 60% interest in PT Arafura Surya Alam. The combined gross proceeds for the disposals completed in the third quarter of 2011 were US$27 million. All of the sales completed in 2011 were originally announced on 24 December 2010.

In accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, all of the assets and liabilities of the Indonesian and Malaysian operations, apart from cash, were treated as a disposal group from the date of the announcement of the sale on 24 December 2010, and were disclosed separately in the statement of financial position at 31 December 2010 and 31 March 2011, and the remaining unsold entities at 30 June 2011, 30 September 2011, and 31 December 2011. As the transaction was on a cash free debt free basis, the cash held by entities held for sale was classified as continuing operations rather than discontinued operations. Prior to the reclassification, management reviewed the carrying values and recognition of assets and liabilities respectively, and no adjustments were required to measure assets and liabilities at the lower of carrying value or fair value less costs to sell. Since 24 December 2010, the date on which the criteria for being held for sale were met, no depreciation was charged in the Group financial statements for the Malaysian and Indonesian assets, in accordance with IFRS.

In 2011, Avocet completed the sale of PT Arafura Mandiri Semangat (PT Arafura) and PT Aura Celebes Mandiri (PT ACM) to Reliance Resources Limited, a company owned by Golden Peaks Resources Limited (Golden Peaks). Consideration was in the form of 7.9 million Golden Peaks shares, which are classed as available for sale financial assets and are recognised at fair value at the reporting date (note 7). Golden Peaks is listed on the Toronto Stock Exchange. The PT AMS and PT ACM held non-core exploration projects in Indonesia.

The results of the disposal group are presented separately in the comparative consolidated income statement and the segmental analysis, as required by IFRS.

The profit on disposal of the entities sold during 2011 is presented in full in the annual report for the year ended 31 December 2011.

Completion of one of the last two exploration assets 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 last remaining South East Asian exploration company.

3. Segmental reporting

IFRS 8 requires the disclosure of certain information in respect of reportable operating segments. One of the criteria for determining reportable operating segments is the level at which information is regularly reviewed by the Chief Operating Decision Maker (CODM) for the purposes of making economic decisions. In the prior period, this segmental information was presented for the UK and West Africa as continuing operations, and Malaysia and Indonesia as discontinued operations. The disposal of Avocet's assets in South East Asia enabled the strategic refocus of the Group, with the Inata operating mine and exploration projects in West Africa being the core focus. To reflect the change in focus of the Group, management has reassessed the segments which should be reported under IFRS 8. In this report, operating segments for continuing operations 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 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 2). Comparative periods have been represented on this basis to allow for a consistent comparison.

3. Segmental Reporting