AVM.L Regulatory News (AVM)

Avocet Mining PLC ("Avocet" or "the Company")

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

·; Gold production of 236,396 ounces at a cash cost of US$660 per ounce, compared with 109,548 ounces at US$639 per ounce in the previous year

·; Realised gold price of US$1,174 per ounce1, compared with US$975 per ounce in 2009

·; EBITDA of US$86.3 million, up from US$29.9 million for year ended December 2009, an increase of 189%

·; Profit before tax and exceptionals of US$33.4 million compared with US$10.4 million for year ended December 2009, an increase of 221%

·; Successful ramp up of production at Inata - completed ahead of schedule

·; Inata project finance completion tests passed 31 December 2010

·; Inata life of mine average annual production to increase from 120,000 ounces to 165,000 ounces from 2011

·; Reserves and resources at Inata increased by 25% and 16% respectively - drilling programme underway with the target of doubling reserves by Q3 2011

·; Maiden resource of 561,100 ounces announced at Souma, 20 km from the Inata mine

·; Exploration programme initiated in Guinea including airborne geophysical survey, 48,000 metres RC drilling and 19,000 metres diamond drilling

·; Conditional agreement signed for the sale of South East Asian assets for US$200 million in cash - rights of first refusal have either lapsed unexercised or been assigned to J&Partners; further issues remain to be addressed

·; Net debt reduced from US$42.9 million to US$28.5 million

1 Includes 51,199 ounces sold into Inata hedge at average price of US$970 per ounce

2 The Company changed its year end from March to December with effect from 31 December 2009

3 On 24 December 2010, the Company announced that it had signed a conditional agreement to sell its assets in South East Asia. The results of these assets have been presented as discontinued for all periods presented. Refer to note 2 for further information

Commenting on the preliminary results, Brett Richards, Chief Executive Officer for Avocet, stated:

"In my first year of reporting operating and financial results as Chief Executive Officer, I am pleased to be able to report on a strong performance. The Inata mine in Burkina Faso has been developed into Avocet's flagship project, with production and ramp-up achieved ahead of schedule. However, our objectives in and around Inata are still at an early stage. Our exploration projects in both Burkina Faso and Guinea are progressing well and continue to demonstrate real promise with respect to building a larger business in these regions. During the period, we also announced the conditional sale of our South East Asian assets for US$200 million on 24 December 2010, which, on completion, will allow us to focus our people and resources on becoming a leading West African gold mining and exploration company in 2011 and beyond."

Avocet will host a conference call on Tuesday 22 February 2011 at 09:30am (London, UK time) to update investors and analysts on its results.

Participants may join the call by dialling one of the three following numbers, approximately 10 minutes before the start of the call.

From UK: (toll free) 0800 368 1895

From Norway: (toll free) 800 135 47

From rest of world: +44 (0)20 3140 0693

Participant pass code: 175331#

A live audio webcast of the call will be available on:

http://mediaserve.buchanan.uk.com/2011/avocet220211/registration.asp

A replay of the webcast will be available on the same link from 11am on Tuesday 22 February 2011.

Notes to Editors

Avocet Mining PLC ("Avocet" or "the Company") is a gold mining company listed on the AIM market of 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 Burkina Faso (as 90 per cent owner of the Inata gold mine), Malaysia (as 100 per cent owner of the Penjom gold mine, the country's largest gold producer) and Indonesia (as 80 per cent owner of the North Lanut gold mine and Bakan project in North Sulawesi).

In December 2010 Avocet announced that it had signed a binding agreement for the conditional sale of its South East Asian assets to J&Partners L.P, a private company, for US$200 million. The transaction with J&Partners will leave Avocet as a West African gold producer with a clear strategy for growth in that region. Further details can be found in the press release dated 24 December 2010.

Background to operations

The Inata deposit presently comprises a Mineral Resource of 1.84 million ounces and a Mineral Reserve of 1.08 million ounces. Inata poured its first gold in December 2009 and has now reached a production rate in excess of 13,500 ounces per month. Other assets in West Africa include exploration permits in Burkina Faso (the most advanced being the Souma trend at Bélahouro, some 20 kilometres from Inata, with a Mineral Resource of 561,100 ounces), Guinea and Mali (the most advanced being the Tri-K gold exploration project in Guinea with a Mineral Resource of 666,500 ounces).

Penjom is Malaysia's largest gold mine and was developed by Avocet 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.

North Lanut in North Sulawesi, Indonesia, was developed by Avocet from the exploration stage and has produced over 270,000 ounces since it was commissioned in 2004. North Lanut is located within a Contract of Work, which includes exploration and mining rights over approximately 50,000 hectares in an area highly prospective for gold. Avocet holds an 80 per cent interest and an Indonesian company, PT Lebong Tandai, owns the remaining 20 per cent.

CHAIRMAN'S STATEMENT

In my first statement to you as Chairman, I am pleased to be able to report that Avocet has had a strong year, and is well placed strategically to deliver growth into 2011 and beyond.

The Company has a new flagship operation at Inata, in Burkina Faso, which, during 2010, completed its commissioning and ramp up to full production smoothly and ahead of schedule.

In October 2010, the board met onsite at Inata. I was impressed with the successes that have been achieved in ramping up production over the course of the year. In speaking to the teams on the ground, I heard how they had energetically and methodically overcome the challenges of commissioning a mine in a remote location. I took away a sense of the enthusiasm felt by our employees in respect of Avocet's operations, as well as for the region as a whole. This inspires optimism for the future.

Inata represents the foundation on which the Company aims to build a significant operation in West Africa. A series of projects are already underway to deliver growth in the region, including expanding production and mine life at Inata itself, as well as exploration programmes expected to deliver significant increases in resources in Burkina Faso and in Guinea.

On 24 December 2010, Avocet announced that it had entered into a conditional agreement to sell its South East Asian assets for US$200 million. We have made progress towards completion of the disposal and while there are still outstanding conditions to completion, our expectation remains that this should occur in the second quarter of this year. Proceeds from the disposal will be received once the remaining conditionality has been satisfied, and will largely be used to support Avocet's strategic focus of growth in West Africa.

In June, Avocet announced its successful listing on the Oslo Børs, a move which will facilitate trading in Avocet shares for our Scandinavian shareholders (who represent a significant proportion of our share capital), as well as providing access to an additional investor base.

Gold prices have been consistently strong throughout 2010, with record levels being achieved. The climate of economic uncertainty has affected western economies in particular, and has sustained demand for gold as a safe haven investment, and a protection against inflation. At the same time, jewellery demand in developing countries has been strong (particularly India), and the outlook for gold prices in 2011 remains positive.

On behalf of the board, I would like to express my thanks to all Avocet employees for making 2010 a successful year. I very much look forward to working with them as Avocet delivers on its strategy to become a successful mid-tier gold producer to the benefit of all its stakeholders.

Russell Edey

21 February 2011

CHIEF EXECUTIVE OFFICER'S STATEMENT

Avocet entered 2010 with mature producing assets and various stage exploration projects in South East Asia, and a newly constructed mine in Burkina Faso, West Africa. The year developed quickly into one of watershed change for the Company, as it concentrated on divesting out of South East Asia and laying the platform for building a bigger business in West Africa.

As we move into 2011, the Inata mine in Burkina Faso has become our flagship gold mine and is already exceeding its nameplate capacity in steady state production. In addition, a number of our exploration targets in and around the mine site, and in the Bélahouro district, have already yielded excellent returns, a good omen for our significant exploration programme which will dramatically improve our understanding of the region as a whole. In Guinea, positive early stage drilling programmes in Q4 2010 mean that an airborne geophysical survey is needed over the large land package known as Tri-K, in order to prioritise drill targets over a very large area. This coming year will also see a significant drilling programme conducted on this project in Guinea, so that a comparable assessment of next stage development can be made between Burkina Faso and Guinea in Q4 2011. Meanwhile, we have negotiated the conditional sale of our South East Asian assets, which, on completion, will deliver approximately US$200 million in cash, which in turn will be largely invested in our fast growth West African assets, particularly in accelerating the growth of not only reserves and resources, but also production of gold ounces.

West African operations

Inata - Burkina Faso

(1) Avocet acquired a 90% interest in the Inata mine in 2009. The Inata mine commenced production in 2010, therefore there are no comparative periods reported.

(2) Production statistics are for the year ended 31 December 2010; cash costs are reported for April to December 2010 as commercial production had not been reached in Q1 2010.

A considerable amount of work was required to get the Inata commissioning project on track following Avocet's acquisition of Wega Mining in 2009. Since then, milestones have been achieved consistently on or before schedule, and the progress of the mine over the course of 2010 has been a source of considerable pride for Avocet, as well as giving cause for confidence in the ability of our teams to deliver success to similar construction projects in the future.

First gold was poured on 20 December 2009. Throughout the first quarter of 2010, Inata was in the ramp up stage and had not reached commercial production. Accordingly, all revenue and costs for the quarter were capitalised and no cash cost is reported for the first quarter. Since 1 April 2010, when commercial production commenced, all revenue and operating costs at Inata have been recognised in the income statement and cash costs are reported from that date.

By May, production had reached 10,000 ounces per month, after various bottlenecks in the plant had been resolved. Production for the full year of 137,732 ounces at an average cash cost of US$531 per ounce was significantly better than expectations at the start of the year. This outcome reflects the determination and effort of the teams at site who undertook the work. The initial commissioning phase at Inata was formally concluded on 31 December 2010 after passing a set of physical and economic completion tests based on an evaluation by independent consultants on behalf of the project financiers, Macquarie Bank Limited.

The focus at Inata is now to build on this growth. In June 2010 Avocet announced that it was targeting to double Inata's Mineral Reserves by the end of Q3 2011. A 16 per cent increase in Inata's Mineral Resources to 1.8 million ounces was announced in September 2010 following a comprehensive exercise of relogging and remodelling historical drilling results as well as updated drilling data; and a 25 per cent increase in Mineral Reserves to 1.1 million ounces was subsequently announced. Work is now underway to sustain the expanded plant throughput from its nameplate capacity of 287 tonnes per hour to 340 tonnes per hour, by adding a second elution column to increase the stripping. This will deliver an increase in the plant's capacity from the second half of 2011, allowing average life of mine gold production to increase from 120,000 ounces to 165,000 ounces per annum despite a scheduled decline in grades over the mine life. Mining production also needs to be increased to meet the increased mill throughput capacity and to allow faster waste stripping of the Inata Central and Inata South pits in accordance with a revised mine plan associated with the larger reserve. A second mining fleet is now fully operational, and a third mining fleet, due to be commissioned in mid-2011, has been ordered to achieve this increase in mining capacity.

The outlook at Inata for 2011 is for production of 165,000 ounces. The addition of a third mining fleet to underpin life of mine (LoM) growth means that cash costs in 2011 are expected to increase from Q2 2011 to Q3 2011, and the year average is expected to be at the upper end of the LoM range of US$525-575 per ounce.

Exploration - West Africa

Exploration in West Africa has focused on a number of prospective areas in Burkina Faso and Guinea, while work is also planned in Mali.

In Burkina Faso, an airborne geophysical survey was undertaken in June 2010 to assess potential targets in the Bélahouro District, an area of over 1,600 square kilometres in the north of the country that includes the Inata gold mine. The analysis of the results of this survey was completed in September 2010, and formed the basis of a prioritised drilling programme for the Bélahouro area.

In November 2010, following a 22,000 metre drilling programme earlier in the year, Avocet announced a maiden 561,100 ounce resource at the Souma Trend, located 20 kilometres east of the Inata gold mine, increasing the total resources at Bélahouro to 2.4 million ounces.

In addition, a 200,000 metre programme of drilling in and around the Inata mine commenced in October 2010, with the target of doubling reserves at Inata by the end of Q3 2011.

In Guinea, exploration in the year focused on developing drilling targets at Tri-K in the north east of the country. After the success of the airborne survey at Bélahouro, a similar survey will be undertaken in Q1 2011 to identify the most prospective drilling targets in the Tri-K block. The results of this survey will be used to further identify priority targets for an extensive drilling programme that commenced in late 2010 and will continue throughout 2011. Drilling will aim to expand the 0.7 million ounce resource at Koulékoun and develop a maiden resource at Balandougou by mid-2011.

South East Asia Operations

Gold production at Penjom in Malaysia was lower than the previous year due to lower grade, and waste stripping requirements. Total gold production for the year was 51,084 ounces, at a cash cost of US$944 per ounce, reflecting higher mining costs as mining continued to operate in tight, restricted areas, as well as the requirement for an extensive waste stripping program in Q2 2010 and Q4 2010 in an effort to access the ore bodies in the Janik and Jalis pit areas. At North Lanut in Indonesia, gold production in the year of 47,580 ounces was slightly higher than the previous year due to higher grades processed and refined leach pad management techniques. Cash costs of US$674 per ounce increased from US$550 per ounce in the previous year, reflecting additional leach pad management costs and a full year of mining at two pits and at greater depth. Exploration in South East Asia focused on the Doup and Seruyung projects, with drilling at both properties in the second half of the year following preparation during the first half.

Penjom - Malaysia

North Lanut - Indonesia

During 2010 we conducted a strategic review of our South East Asia assets with the aim of ensuring these assets deliver the maximum value for the Group, and concluded that this aim would best be achieved through a cash sale, allowing the Company to focus on growth in West Africa. After a structured process during the second half of the year we announced the conditional sale of our assets in South East Asia to J&Partners, L.P., for a cash consideration of US$200 million. At 10 February 2011, being the expiry date for notification of exercise by minority interests of their rights of first refusal over certain of the sale assets, these rights had either lapsed unexercised or been assigned to J&Partners; further issues remain to be addressed. J&Partners, L.P. is a mining fund established by Mr Jimmy Budiarto, a member of the Indonesian family that in November 2009 sold its interest in Indonesia's second largest mining contractor, PT Bukit Makmur Mandiri Utama (BUMA). With its experience of mining in Indonesia we are confident that J&Partners, L.P. will be able to develop the assets to their fullest potential, working with the high quality operational and exploration workforce that has enabled Penjom and North Lanut to produce over 1.5 million ounces over their mine lives to date and grow a resource base of 3.3 million ounces.

Financial results

During 2009, the Group changed its year end from 31 March to 31 December, with the result that the previous audited financial statements were for the nine months 31 December 2009.

Following the signing of the conditional agreement to sell the Group's assets in South East Asia, the operating results of these assets have been presented in the consolidated income statement as discontinued for the current and comparative periods, and as a disposal group in the current period statement of financial position, as required by International Financial Reporting Standards (IFRS). The assets and liabilities of the disposal group are presented separately in the consolidated statement of financial position in the current period. A detailed analysis of the results, assets, and cash flows of the disposal group is presented in the segmental information.

The Group reported a profit before tax from continuing and discontinued operations for the year ended 31 December 2010 of US$33.5 million, compared with a loss of US$10.6 million for the nine months ended 31 December 2009. Before exceptional items, profit before tax in the year was US$33.4 million, compared with US$7.9 million for the nine months ended 31 December 2009. Exceptional items in 2010 included US$2.4 million of costs relating to the Oslo Børs listing in June, as well as net profit of US$2.7 million generated through the divestment of non-core assets (including the Houndé licences in Burkina Faso, and the Company's investments in Merit Mining, Dynasty Gold Corporation, and Monument Mining).

During the year, the Company sold 234,949 ounces at an average realised gold price of US$1,174 per ounce, compared to 111,279 ounces at US$975 per ounce in the year ended 31 December 2009. 2010 gold sales included 51,199 ounces delivered into the Inata hedge book at a price of US$970 per ounce.

The average cash costs of the Group increased from US$639 per ounce for the year ended 31 December 2009 to US$660 per ounce for the year ended 31 December 2010. This increase was driven largely by an 18 per cent fall in production at Penjom, while additional mining costs were incurred at both South East Asian operations as a result of operating in more mature, deeper pits. The Group's EBITDA and profit before tax is stated after charging share based payments totalling US$8.6 million, largely awarded in accordance with the Company's share bonus plan. The awards arose as a result of the Company's share price appreciation, relative to the FTSE Gold Mines Index, over two periods: 1 April 2009 to 31 March 2010 and 1 April 2010 to December 2010. Owing to the Company's change in year end, awards for both of these periods fell into the income statement of 2010. The taxation charge of US$15.3 million in 2010 principally reflects deferred tax charges totalling US$10.9 million. At Inata, although no cash tax is currently payable, the adoption of a new mine plan in response to the reserve increase announced in September 2010, combined with higher gold prices, means that higher tax will be payable later in the mine life, resulting in an increase in deferred tax charge during Q4 of US$9.6 million.

Net cash generated by all operations in the year totalled US$63.0 million, compared to US$17.1 million in the nine months to December 2009, while divested non-core assets generated a total of US$9.9 million. This funded capex totalling US$49.1 million, capitalised exploration costs of US$12.7 million, and debt repayments of US$12.0 million.

Net debt at the start of the year of US$42.9 million (consisting of US$47.1 million in cash and US$90.0 million of debt), decreased over the period by US$14.4 million to US$28.5 million (US$49.5 million of cash and US$78.0 million of debt).

Debt repayments of US$12.0 million were made in the year, reducing the Macquarie Bank loan from US$65 million to US$53 million at 31 December 2010.

People

Having been appointed to the role as Chief Executive Officer of Avocet during a period of major change, I have been extremely fortunate to enjoy the support of a dedicated, experienced, and highly motivated team, from the Executive Committee to the operational teams on site. I would like to personally thank all Avocet employees for their hard work during 2010.

Brett Richards

21 February 2011

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

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2010

1. Basis of preparation

The Group financial statements consolidate those of the Company and of its subsidiary undertakings; the consolidated financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union at 31 December 2010.

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The consolidated statement of financial position at 31 December 2010 and the consolidated income statement, consolidated cash flow statement and other primary statements and associated notes (excluding note 16) for the year then ended have been extracted from the Group's statutory financial statements for the year ended 31 December 2010 (which have not yet been filed with Companies House) upon which the auditor's opinion is unqualified, and does not include any statement under Section 498 (2) or (3) of the Companies Act 2006.

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

On 24 December 2010, the Company announced that it had signed a binding agreement for the conditional sale of its South East Asian assets for cash consideration of US$200 million. The South East Asian assets include the Penjom mine in Malaysia; the North Lanut mine and Bakan project in North Sulawesi, Indonesia; and a number of exploration properties in Indonesia. Completion is conditional on government agency approvals and other conditions precedent. The transaction was also subject to certain rights of first refusal ("ROFR") held by minority interest parties. At 10 February 2011, being the expiry date for notification of exercise by minority interests of their rights of first refusal over certain of the sale assets, these rights had either lapsed unexercised or been assigned to J&Partners; further issues remain to be addressed.

The signing of the agreement to sell the Group's South East Asian assets concluded a strategic review of these assets that had been undertaken during 2010. The outcome of this process was a conclusion that the sale of these assets was the best way of delivering value to shareholders from the South East Asian business. Therefore, 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, have been treated as a disposal group and are disclosed separately on the balance sheet. Prior to the reclassification, management reviewed the carrying values and recognition of assets and liabilities respectively, and no adjustments have been required to measure assets and liabilities at the lower of carrying value or fair value less costs to sell.

The disposal will be on a debt-free cash-free basis, and therefore the cash held in the Indonesian and Malaysian entities at 31 December 2010 has been treated as Group cash and cash equivalents and does not form part of held for sale assets.

The results of the Malaysian and Indonesian operations have been treated as discontinued operations and presented separately in the income statement for both the current and comparative period.

The disposal group comprises all operations that are classified as the Malaysian and Indonesian segments for the purposes of segmental reporting under IFRS 8. The internal reporting of the results of these operations to management remains unchanged. Therefore, the results of these segments remain included in the segmental analysis presented in Note 15 and provide an analysis of the net profit from discontinued operations as presented in the consolidated income statement, and the composition of disposal group assets and liabilities. The segmental cash flow statement in Note 3 provides an analysis of operating cash flows attributable to discontinued operations, and cash spent on investing activities.

The goodwill and deferred consideration recognised in the consolidated statement of financial position at 31 December 2009 relates to Avocet's 80 per cent interest in the Indonesian company PT Avocet Bolaang Mongondow. The goodwill and deferred consideration relate to the disposal group held for sale, therefore the respective carrying values at the period end have been included in the assets and liabilities of the disposal group held for sale. Prior to the transfer to the disposal group, the recoverability of the goodwill was assessed by reference to the recoverable amount of PT Avocet Bolaang Mongondow and no impairment was required.

3. Segmental Reporting

(a) Other cost of sales represents costs not directly related to production, including exploration expenditure not capitalised;

(b) Includes amounts in respect of the amortisation of closure provisions at Inata, Penjom and North Lanut;

(c) EBITDA represents earnings before exceptional items, finance items, tax, depreciation and amortisation.

(d) Adjustments for non-cash items include depreciation and amortisation, share based payments, movement in provision, taxation in the income statement and non-operating items in the income statement;

(e) Other cash movements include deferred consideration paid, cash flows from financing activities, and exchange losses;

(f) The sale of South East Asian subsidiaries is for a debt-free cash-free consideration. Therefore, cash held in Malaysian and Indonesian subsidiaries at 31 December 2010 has been excluded from the held for sale assets, and reported as Group cash in the consolidated statement of financial position.

For the nine months ended 31 December 2009