AVM.L Regulatory News (AVM)

3 May 2012

Avocet Mining Results for Quarterended 31 March 2012

HIGHLIGHTS

·; Inata Gold Mine expansion study progressing to schedule with first gold anticipated late 2013

·; Ongoing discussions with Guinean Government on Koulékoun Gold Project encouraging

·; Board and management strengthened with the appointment of Gordon Wylie as an independent Non-executive Director and David Cather as Chief Operating Officer

·; Gold production of 38,296 ounces (Q4 2011: 46,102 ounces)

·; Cash cost per ounce including royalties of US$850 (Q4 2011: US$773)

·; Full year guidance of 160,000 ounces maintained at a cash cost of between US$800 - 850 per ounce

·; EBITDA from continuing operations of US$28.1 million (Q4 2011: US$27.2 million)

·; Profit before tax and exceptionals from continuing operations US$20.8 million (Q4 2011: US$15.7million)

·; Cash at 31 March 2012 US$100.5 million (31 December 2011: US$105.2 million) after debt repayment of US$6.0 million in the quarter, debt reduced to US$23 million

·; Earnings per share from continuing operations 6.33 cents (Q4 2011: 0.9 cents)

·; Entered FTSE 250 Index on 16 March 2012

KEY FINANCIAL METRICS

Commenting on the first quarter results, Brett Richards, Chief Executive Officer of Avocet, said:

"During the first quarter of 2012,Avocet has continued to deliver on its targets as the Company makes progress in becoming a leading West African gold mining and exploration company. The quarter's operational and financial performance at Inata were in linewith guidance to the market and the remainder of 2012 looks encouraging, with cost cutting initiatives and operational efficiency projects expected to produce results during the second half of the year. The expansion study at Inata is progressing well and subject to a satisfactory outcome, we anticipate entering construction in late 2012 withcommissioning and firstgold in late 2013."

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Notes to Editors

Avocet Mining PLC is a leading West African gold mining and exploration company listed on the London Stock Exchange (AVM.L) and the Oslo Børs (AVM.OL).

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.

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 licences 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 0.41 million ounces.

Avocet's Mineral Resources, which are inclusive of Mineral Reserves, are estimated in accordance with the principles of the Canadian NI 43-101 and Australian JORC Codes, and are reported in accordance with the Australian JORC Code.

CHIEF EXECUTIVE OFFICER'S REVIEW

STRATEGIC REVIEW

During the first quarter of 2012, Avocet Mining PLC ("Avocet" or the "Company") has continued to deliver on its strategic and operational objectives for the year. Production and cash costs are in line with expectations and full year guidance of 160,000 ounces of production at a cash cost of between US$800 - 850 per ounce remains in place. Subject to a satisfactory outcome of the scoping study,the Inata expansion project is on track for construction commencing in late 2012 and first gold is anticipated in 2013. The Company has a strong cash position and further cash generation from the Inata Gold Mine will support future capital plans.

Subsequent to the Company's admission to the Main Board of the London Stock Exchange in December 2011, Avocet entered the FTSE250 Index in March 2012. The Company's dividend policy is to pay an annual dividend of US$20 million, of which the proposed final dividend of 4.2 pence for 2011 isto be voted on by the shareholders at the Company's general meeting today.

Avocet's Board was strengthened with the appointment of Gordon Wylie as an independent Non-executive Director on 22 February 2012. Gordon has over 35 years of experience as a geologist, senior executiveand company director in the mining sector in Africa, Asia and the Americas, including eight years at AngloGold Ashanti as Head of Exploration and Geology. Subsequent to the sale of Datum's shares in Avocet in March 2012, Harald Arnet resigned as a Non-executive Director of the Company.

Avocet has also strengthened its senior management team, with the appointment on 1 May of David Cather as Chief Operating Officer. David brings over 30 years of worldwide mining and project development experience to Avocet, and was recently the Chief Operating Officer of European Goldfields.

Political turbulence in Mali continues in advance of the elections that are intended to be held in May 2012. In Burkina Faso, which neighbours Mali to the south-east, there has been an influx of refugees from Mali, with an estimated 5,000 refugees having settled in organized refugee camps at Djibo, some 70 kilometres from the Inata Gold Mine. Avocet's management has and continues toprovide humanitarian aid for these refugees. To date, the unrest in Mali has had no impact on operations at the Inata Gold Mine.

Discussions with the Guinean government with regards to the tax and investment regime that would apply to the development of a mine at Koulékoun are ongoing. In mid-January 2012, a delegation of senior Avocet management conducted a series of meetings with senior personnel from the Guinean government. The discussions were encouraging and prior to departing, Avocet was asked to submit a paper regarding potential changes to the Guinean mining codeto the President's Office and to the Minister of Mines, which it subsequently did.

On 26 March 2012, the Guinean government announced a Presidential decree for the formation of a Commission Nationale des Mines (National Commission of Mines), a new body that will oversee all aspects of the mining industry in Guinea. This development is intended to increase transparency in decision making on mining matters, including the formulation of the new mining code and the granting of new mining licences, permits and conventions. The Department of Mines and Geology will continue to exist, as an administrative arm to the National Commission of Mines.

Avocet senior management was subsequently called upon by the newCommission to present the details of the Koulékoun Gold Project to a delegation of over 70 government officials and media personnel. The Company anticipates that discussions between the government, mining companies and other stakeholders will continue over the coming months and is optimistic that these will result in a revised mining code satisfactory to progress its Koulékoun project into the feasibility study stage.

Earlier this year PT Lebong Tendai (Avocet's former partner in the North Lanut Gold mine, "PT LT") lodged an appeal to the Indonesian High Court against the District Court's decision to dismiss PT LT's case against Avocet. This appeal which is required to be lodged at the District Court is yet to be referred to the High Court by the District Court. A new legal claim against Avocet and other joint defendants has subsequently been registered by PT Lebong Tandai (its former partner in the North Lanut Gold mine) in the South Jakarta District Court on 12 April 2012. The Company has not been served and no details of the claim (apart from the parties' names) appear in the court's register, therefore it is unclear in what way this new claim may differ from the previous claim.

OPERATIONAL REVIEW

Mineral Resource Development

In early February 2012 Avocet announced an updated Mineral Resource estimate of 3.46 million ounces and an increased Mineral Reserve estimate of 1.85 million ounces within the Inata mine licence area. This achieved the Company's target of doubling the Mineral Reserve at the Inata Gold Mine since acquiring the mine in 2009. This target was reached despite depletion of 93,000 ounces from mining since the last Mineral Reserve estimate as at 30 June 2011. The increased Mineral Reserve extends the mine life to 12.5 years at the current life of mine average annual production capacity of 2.7 million tonnes of ore processed.

Gold production and cash costs

Total mining tonnages at Inata in the quarter were 7,818k tonnes, 10% lower than the fourth quarter of 2011 due to availability issues with two of the excavators on site. Ore mined in the period was 578k tonnes, lower than the previous quarter for similar reasons. Over the quarter, the strip ratio was 12.5:1, broadly in line with the expected strip ratio for the year of 12:1.

Mill throughput at 608k tonnes was satisfactory, in line withthe scheduled maintenance work over the period. Ore grades processed were 2.36 g/t Au, higher than recent quarters, however recoveries were slightly lower as the mining sequence dictated the plant processed high grade ore with a higher carbon content.

Gold production was 38,296 ounces, in line with guidance of approximately 40,000 ounces per quarter. The plant recovered 40,252 ounces, but approximately 2,000 additional ounces remained in the gold circuit at the quarter end and were poured in Q2 2012.

Cash costs in the quarter were US$850 per ounce, at the upper end of guidance for the year of US$800-850 per ounce. Reductions were seen in reagents, labour and administrative costs, but costs per ounce were affected by the slightly lower reported gold production in the quarter, including changes in gold in circuit. Management remains focused on cost management and continuing to drive the various cost savings initiatives currently underway at Inata.

In early April, the preliminary findings from the Inata expansion study were announced. These indicate that the construction of a new process plant, operating in parallel with the existing plant, would be the optimal means by which to increase the mine's processing capacity. The benefits of building a second plant include increased processing flexibility and a reduction in overall production risk. An evaluation of various treatment processes that would be appropriate for processing the different ore types in existence in the enlarged Inata ore body is currently underway, in parallel with a comprehensive programme of metallurgical test work. The test work and final report is expected to be completed by the end of the second quarter and a further announcement including initial capital estimates and timelines will be made early in the third quarter. The anticipated capital expenditure for a new plant is approximately US$120 million, in line with original guidance, and a further US$20 - 30 million for additional fleet capacity. The timeline of construction commencing before the end of 2012, and first gold by the end of 2013, remains unchanged.

FINANCIAL REVIEW

Gold sold in the quarter was 39,064 ounces at an average realised price of US$1,543 per ounce, (including 8,250 ounces sold into forward contracts at US$950 per ounce), compared with 45,669 ounces at US$1,543 per ounce in Q4 2011 and 47,585 ounces at US$1,172 per ounce in Q1 2011.

Cash costs were US$850 per ounce, an increase of 10% from Q4 2011. This is primarily attributable to lower gold production. Mining costs per tonne were US$1.63, marginally higher than in Q4 2011 and processing costs of US$17.81 per tonne were in line with Q4 2011. On site administration costs were US$4.7 million, US$1 million lower than the previous quarter. The increase in cash costs compared with theUS$533 per ounce reported for Q1 2011 is attributable to lower gold production in the quarter and increased costs resulting from an expanded operation including an additional mining fleet.

EBITDA for the quarter was US$28.1 million, an increase of US$0.9 million over the final quarter of 2011. The US$10.2 million impact on revenue of lower production and different timing of sales was compensated by total cash costs being US$3.1 million lower and by a US$8.0 million favourable inventory change, while administrative costs and other cost of sales were US$0.4 million lower. EBITDA increased 10% compared with Q1 2011, principally as a result of increased revenue arising from a higher realised gold price, and favourable inventory movements.

Profit before tax was US$20.8 million, compared to US$12.6 million for continuing operations in Q4 2011 and Q1 2011. Thedifferential against Q4 2011 is primarily the result of lower depreciation (which is a function of ounces produced relative to the enlarged life of mine reserve), and lower administration charges. The income statement reflects a deferred tax chargeof US$6.9 million in respect of Burkina Faso, but cash tax is not yet payable. It is expected that cash tax will become payable in 2013. The increase in profit before tax compared with Q1 2011 is principally attributable to increased revenue, lower depreciation charges, and favourable inventory movements.

Operating cash flow of US$13.9 million in the quarter reflected US$28.9 million cash inflow from operating activities before working capital adjustments, less working capital and interest outflows totalling US$15.0 million. Working capital outflows included a decrease in creditors of US$2.5 million and an increase in inventory of US$9.9 million, partlyrelating to gold on hand and higher gold ounces in the ore stockpileat the quarter end, while the timing of VAT refunds resulted in a US$2.3 million increase in trade receivables. Operating cash flow before working capital adjustments is US$3.2 million higher than Q1 2011.

During the quarter US$4.9 million was invested in capital expenditure at the Inata Gold Mine and a further US$8.1 million in our exploration programmes in Burkina Faso and Guinea. In February the Company received proceeds of US$2.0 million for the sale of one of its remaining South East Asia assets, while US$6.0 million of the loan facility with Macquarie Bank Limited was repaid in the period. The outstanding balance on this facility now stands at US$23 million, and is scheduled to be repaid by 31 March 2013.

The Company's cash balance at the period end was US$100.5 million.

OUTLOOK

The outlook for the remainder of 2012 remains strong for Avocet. Concerns about European financial instability, slower than expected US and Chinese economic growth, and higher than expected US unemploymentcontinue to support the current gold price. However, economic data continues to generate mixed views on the gold price in the short to medium term. Furthermore investorsappearmore cautious abouttaking long positions in gold due to acute political or financial events which could triggersignificantmovements in the spot gold price.

At Avocet, we maintain our strategy of growing the business as efficiently as possible, and we continue to be focused on delivering strong shareholder returns. I feel that our approach of continued delivery onour stated targets will be the key to unlocking shareholder value as Avocet progresses towards being a leading West African gold mining and exploration company.

BRETT RICHARDS

Chief Executive Officer

(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 quarterly 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 quarterly 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 quarterly report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The unaudited condensed quarterly financial statements for the three months ended 31 March 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 MandiriSemangat (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. 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 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 hasreassessed 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 elsewhere in West Africa. 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 (continued)

a) Expensed exploration and 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 mine closure provision at Inata;

c) EBITDA 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.

3. Segmental reporting (continued)

d) Includes depreciation and amortisation, share based payments, movement in provisions, taxation in the income statement, and other non-operating items in the income statement;

e) Other cash movements include cash flows from financing activities and exchange gains or losses.

3. Segmental reporting (continued)

a) Expensed exploration and 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 mine closure provision at Inata;

c) EBITDA 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.

a)

3. Segmental reporting (continued)

d) Includes depreciation and amortisation, share based payments, movement in provisions, taxation in the income statement, and other non-operating items in the income statement;

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

f) The sale of subsidiaries in South East Asia was for a debt-free cash-free consideration. Therefore, cash held in Malaysian and Indonesian subsidiaries at 31 March was excluded from held for sales assets, and reported as Group cash in the consolidated statement of financial position.

4. Earnings per share

Earnings per share are analysed in the table below, presenting earnings per share for continuing and discontinued operations.

5. Intangible Assets

Intangible assets represent deferred exploration expenditure, the movement in the period is analysed below: