AVM.L Regulatory News (AVM)

Refinancing & Unaudited Interim Results for

the quarter ended 30 September 2013

Refinancing & Tri-K

· Avocet poised to become a fully unhedged gold producer;

· US$63 million medium term loan facility with Ecobank Burkina Faso drawn down - no hedging required;

· Ecobank loan term of five years at interest rate of 8% per annum;

· Remaining Macquarie debt repaid during the quarter - entire Macquarie hedge position to be bought back shortly;

· Tri-K feasibility study:

- work to date confirms technical viability of low cash cost operation;

- mining licence application process commenced;

- government approval received for environmental and social impact assessment;

- key Koulékoun exploration licence valid for additional two years; and

- work underway to optimise project, including capital and operating costs, to determine project economics.

Q3 results

· Revised Inata life of mine plan announced in August, with 36% increase in recovered ounces over the eight year mine life;

· Quarterly gold production of 30,987 ounces (Q2: 31,245 ounces);

· Total cash costs (including royalties) of US$1,195 per ounce (Q2: US$1,238 per ounce);

· Average realised gold price of US$1,121 per ounce (including 18,000 ounces delivered into the hedge position at US$938 per ounce); and

· Loss before tax includes negative impact of accelerated hedge delivery and change in the mark-to-market of hedge position during the quarter (in aggregate approximately US$14m)

David Cather, Chief Executive Officer, commented:

"As an unhedged gold producer, the Company will be able to offer shareholders full exposure to the gold spot price on Inata's production. It has long been our goal to become an unhedged gold producer and negotiation of the Ecobank loan will enable us to achieve this target, as well as the flexibility to transfer surplus funds to Avocet for corporate purposes. In the year to date we have delivered the revised life of mine plan for Inata and are close to completing the Tri-K feasibility study, both of which were critical to our refinancing efforts. Our immediate priorities are to complete the hedge buy back, continue to deliver operational improvements at Inata and obtain the Exploitation Permit at Tri-K."

Management Conference Call

The Company will host a conference call for investors and analysts at 9am (UK) on Thursday

31 October 2013.

Dial in details are as follows:

UK: 0800 6940257

Norway: 21563013

Alternative number: +44 (0)1452 555 566

Conference ID: 82678864

A recording of the conference call will also be made available on the Avocet website later on the same day.

FOR FURTHER INFORMATION PLEASE CONTACT

NOTES TO EDITORS

Avocet Mining PLC ('Avocet' or the 'Company') 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 4.7 million ounces and an Ore Reserve of 0.9 million ounces. The Inata Gold Mine poured its first gold in December 2009 and produced 135,189 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 Souma, some 20 kilometres from the Inata Gold Mine, where there is a Mineral Resource estimate of 0.8 million ounces.

In Guinea, Avocet owns 100% of the Tri-K Project in the north east of the country. Drilling to date has outlined a Mineral Resource of over 3.0 million ounces, and in October 2013 the Company announced a maiden Ore Reserve on the oxide portion of the orebody, which is suitable for heap leaching, of 0.5 million ounces. Development of a CIL processing plant to exploit the remaining 2.4 million ounces will be considered once the heap leach feasibility study has been completed.

About Ecobank Group

Ecobank Transnational Corporation ('Ecobank'), a public limited liability company, is a leading pan-African bank with operations in 33 countries across the continent, and was established as a bank holding company in 1985 under a private sector initiative spearheaded by the Federation of West African Chambers of Commerce and Industry with the support of ECOWAS. The Group also has a licenced operation in Paris and representative offices in Beijing, Dubai, Johannesburg, London and Luanda. Ecobank's headquarters are in Lomé, Togo. As at the end 2012, the bank had assets of US$20 billion and revenue of close to US$2 billion.

For more information, please visit www.ecobank.com

 CHIEF EXECUTIVE OFFICER'S REVIEW

The Company today announces that it has closed, and drawn down, a 30 billion FCFA (US$63 million) medium term loan facility with Ecobank Burkina Faso ("Ecobank"). The loan amount is 30 billion Francs de la Communauté Financière d'Afrique ("FCFA"), which is the legal currency of Burkina Faso and the loan amount is currently equivalent to approximately US$63 million. The Ecobank loan has been provided to the Company's 90% subsidiary Société des Mines de Bélahouro SA ('SMB'), which owns the Inata mine. Through this loan, the Company intends shortly to remove all future hedge commitments, and is therefore poised to become an unhedged gold producer.  

The Ecobank facility has a five year term, bears an interest rate of 8% per annum and is secured against certain of the assets of SMB. The first repayment will be made in November 2013 and equal monthly repayments of 631 million FCFA (US$1.3 million), comprising interest and principal, will continue for the 60 month duration of the loan. The facility requires that an amount equal to two months' payments, 1.3 billion FCFA (US$2.6 million), be held as a debt service reserve account. Subject to the debt service reserve account requirement, there are no restrictions on SMB's use of loan proceeds or cash flow generated, including the transfer of funds from SMB to Avocet for corporate purposes. The Ecobank loan facility has no hedge requirement.

The Company's decision to exit the hedge will provide Avocet shareholders with full exposure to the gold price for Inata's presently defined mine life of eight years. The Ecobank loan, which has been drawn down in full, and removal of the hedge, which is expected to occur shortly, will provide more flexibility than under the previous Macquarie Bank Limited ('MBL') facility, including the ability to pass surplus funds up to Avocet for corporate purposes. The final hedge settlement is expected to total approximately US$47 million. This is equivalent to 111,980 ounces bought back at US$938 per ounce. Of the US$47 million total buy back, US$12 million will be satisfied from cash previously held by Macquarie as restricted funds, with the remaining US$35 million provided by the Ecobank loan proceeds. Details of the hedge buy back will be announced to the market following its completion.

During the quarter the Company made the final US$5.0 million repayment of the Inata project finance facility with MBL and all obligations to MBL will be satisfied once the Company removes its hedge commitments.

As announced on 9th October 2013, third quarter gold production of 30,987 ounces was below expectations for the period as a result of lower than planned grades and mill availability. The lower grades in the third quarter partly reflected reduced availability of the mobile fleet, which caused delays in waste stripping to access higher grade ore. Processing during the quarter continued to target oxide ore sources prior to commissioning of the carbon blanking circuit, and as a result recoveries increased to 89%.

Following the lower than expected production in the third quarter, the Company also released revised full year guidance of 125,000-130,000 ounces for 2013, which takes into account the above production issues and their impact on the fourth quarter. The reduced production in H2 2013 means that cash costs per ounce in the second half of 2013 are likely to be similar to those seen in H1 2013.

Regrettably, during the quarter an employee at Inata suffered a lost time injury ('LTI') arising from a hand injury, ending a run for the Company of 517 days without an LTI.

Work on the feasibility study at Tri-K, which was submitted to the government of Guinea in September, has confirmed the technical viability of a low cash cost mining and heap leach operation on the oxide portion of the resources. The Company is in discussions with the Guinean Government with regards to an exploitation permit at Tri-K, and in conjunction with this process the Company has announced a maiden Ore Reserve on the oxide portion of the orebody of 7.9 million tonnes at 1.89 g/t Au for 480,000 contained ounces. The government has now approved the Environmental and Social Impact Assessment and work is underway to optimise the project, including the capital and operating cost estimates, to determine the project's economics.

INATA OPERATIONAL REVIEW

Gold production and cash costs

Results for the Quarter ended 30 September 2013

On 8 August the Company announced a revised life of mine plan for Inata, with an increase in life of mine recoverable ounces of 36% and an increase of 21% in the average annual gold production to 116,000 ounces per annum, when compared with the previous plan announced in March 2013. The revised life of mine plan at Inata includes the construction of a carbon blanking circuit to improve gold recoveries when processing carbonaceous ore types, at a total project cost of US$6 million. September marked the start of the engineering design for this project and a lead engineering consultant has now been appointed. Long lead time items have been ordered and the current focus is on process design and general layout.

As referenced in the Company's press release of 9th October 2013, Inata's underlying operational performance in the quarter was marginally behind expectations with gold production for the quarter of 30,987 ounces.

Following the demobilisation of the additional rental mining fleet in July, the revised life of mine plan envisages a mining rate of 85,000 tonnes per day. Reduced equipment availability contributed to average mining rates of approximately 83,000 and 78,000 tonnes per day in August and September respectively, and access to higher grade ore was delayed as a result. Mining rates were also adversely affected by the wet season, which runs between July and September.

Plant throughput had been expected to improve in Q3 as a result of processing softer oxide material from the Minfo Pit, compared to harder ore sources that have a slower rate of processing. Processing of alternative, harder ore types, in addition to lower than planned mill availability resulted in the overall processing of 620,000 tonnes during Q3, which was in line with Q2 2013, but below Q3 expectations. As a consequence of mining volumes being behind schedule from the Minfo and Sayouba pits, the plant feed was supplemented by lower grade stockpile, lowering the overall head grade for the quarter to 1.73 g/t Au.

Total cash costs (including royalties) in the period were US$1,195 per ounce, a decrease compared to the prior quarter, reflecting the standing down of the mining contractor at the end of Q2 2013, and lower tonnes mined. This was partially offset by higher maintenance costs, together with an increase in the cost of fuel due to an additional 10 cents per litre fuel duty applied by the government of Burkina Faso during the quarter.

Tri-K development project, Guinea

Work on the Tri-K project in Guinea during the quarter made several significant steps towards a mining licence, with an environmental and social impact assessment submitted to the government in July, and technical documents submitted on schedule in September. A feasibility study update was published to the market shortly after the quarter end, which outlined the technical viability of a low cost heap leach operation with a low strip ratio. The maiden Ore Reserve for Tri-K, announced as part of the feasibility study update, is shown in the table below.

Notes: The information in this press release that relates to the Tri-K Ore Reserves, has been estimated in conformance with JORC 2004 Code, and is based on information compiled by Clayton Reeves, of Avocet Mining PLC. Clayton is a member of The Southern African Institute of Mining and Metallurgy (SAIMM) and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person in terms of the JORC Code. Estimates are rounded to nearest significant figure. Rounding errors may occur.

The technical work submitted to the Guinea Government in September outlines a 1.2 million tonnes per annum heap leach plant with an initial seven year mine life, averaging 55,000 ounces of production per annum. The Tri-K project benefits from a low life of mine strip ratio of 2.6 and high gold grades and recoveries (80%) for a heap leach project. Pre-production capital costs are currently estimated as US$88.5 million, and life of mine operating cash costs (including royalty) are currently estimated to be US$787 per ounce.

Certain parameters, including capital expenditure and operating costs, are expected to change as a result of project optimisation work currently in progress.

Souma exploration project, Burkina Faso

In line with previous years, field-based exploration activities, such as drilling, were reduced during the quarter as the rainy season passed.

Resource definition drilling activities within the Inata mining licence recorded results at Minfo that are expected to positively impact the resource model. Results included:

- 25 metres at 3.9 g/t Au from 30 metres depth

- 4 metres at 16.5 g/t Au from 17 metres depth

- 24 metres at 2.5 g/t Au from 6 metres depth

- 20 metres at 1.9 g/t Au from 99 metres depth

In the broader Bélahouro region surrounding the mine site, drilling results were received from the N'Darga Prospect during the quarter, which forms part of the Souma project, and these included 25 metres at 3.9 g/t Au from 30 metres depth and 24 metres at 2.5 g/t Au from 6 metres depth. Geophysics IP dipole modelling on Souma has been completed and a 3D model prepared for the entire Souma trend, which will enhance the Company's understanding of the mineralisation at Souma, as potential additional feed for Inata in the future.

Financial Review

Revenue in the quarter was US$37.4 million, representing 33,385 ounces sold at an average realised price of US$1,121 per ounce. The average spot price fell to US$1,338 per ounce (Q2: US$1,441 per ounce), and an accelerated total of 18,000 ounces was delivered into the hedge at a price of US$938 per ounce (Q2: 8,250 ounces), as part of the strategic decision to reduce the Group's obligations to Macquarie Bank Limited as early as possible.

With cash costs in the quarter averaging US$1,195 per ounce, the impact of this hedge delivery strategy was to reduce gross margin by approximately US$3.6 million resulting in a gross loss of US$10.5 million. For similar reasons, EBITDA in the quarter was also negative at US$6.1 million, while the loss from operations, which includes exploration expenditure, corporate and head office costs, and depreciation, was US$12.5 million.

At 30 September 2013, the mark-to-market liability of the hedge book was US$46.6 million, compared with US$35.8 million at the start of the quarter, resulting in an expense to the income statement of US$10.8 million. Although the total ounces hedged decreased by 18,000 to 117,980, the increase in mark-to-market liability of the hedge reflects the fact that the quarter end spot price increased from US$1,192 per ounce at 30 June 2013 to US$1,327 per ounce at 30 September 2013.

The loss before tax for the quarter was therefore US$25.3 million, compared with a loss of US$20.9 million in Q2.

Cash generated from operating activities was positive in the quarter at US$5.0 million. This was partly due to movements in stockpiles and gold inventories (amounting to US$1.5 million), but also reflected a reduction in the value of spares held on site by US$5.5m, as well as around US$3.7 million from VAT rebates, trade creditors and other working capital movements.

With cash conservation measures in place, capex was restricted to US$0.9 million in the quarter, while feasibility study work at Tri-K and resource definition in the Inata surrounds amounted to US$2.0 million of capitalised costs.

The final instalment of the Macquarie Bank Limited debt facility of US$5.0 million was repaid on 30 September. The third tranche of the US$15.0 million Elliott loan of US$5.0 million was also drawn down in the quarter.

Net cash flow in the quarter totalled US$1.9 million. The closing cash position of the Group at 30 September 2013 was US$19.5 million, with US$15.4 million of debt and accrued interest, a net cash position of US$4.1 million.

Outlook

As previously announced, the impact of the mechanical issues that affected both the mining fleet and plant is expected to extend into the fourth quarter, and as a result, our full year production is now forecast to be 125,000-130,000 ounces, with cash costs similar to those seen year to date.

Our immediate priorities are to achieve operational improvements at Inata and obtain the Exploitation Permit at Tri-K.

DAVID CATHER

Chief Executive Officer

(1) During 2012, the Group disposed of its final South East Asian asset. All operations for 2013 are continuing. Refer to note 3 for further information.

(2) EBITDA represents earnings before exceptional items, 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 2012, 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 three and nine months ended 30 September 2013 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 2013. The accounting policies are not different to those set out in note 1 to the Group's audited financial statements for the year ended 31 December 2012, with the exception of certain amendments to accounting standards or new interpretations issued by the International Accounting Standards Board, which were applicable from 1 January 2013. These have not had a material impact on the Group.

The Company's statutory financial statements for the year ended 31 December 2012 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.

Going Concern

The Group announced today a new US$63 million financing facility with Ecobank, which has a maturity of five years. Approximately US$35 million of this facility will shortly be used to buy back the outstanding hedge with Macquarie Bank Limited. The remaining available loan proceeds, after deducting loan costs and debt service reserve account requirements, of US$25 million exceed the Elliott loan of US$16 million (including interest) that is due for repayment on or before 31 December 2013. However, the possibility exists that lower production or gold prices or other adverse impacts on cash flow over the next six months could cause available liquidity to be insufficient to repay the full US$16m Elliott loan on or before 31 December 2013. The directors therefore believe that a material uncertainty will continue to exist in respect of the Elliott loan until it is either repaid or renegotiated.

In its assessment of going concern, the directors have considered a number of factors including the Ecobank loan repayment schedule, the repayment or the renegotiation of the Elliott loan, the risk of lower production or gold prices, and the possibility of higher than expected operating or capital costs. The directors have also considered the Company's potential responses and actions to mitigate or address these issues. As a result of this assessment, the directors have concluded that they have a reasonable expectation that the Company will have sufficient cash to meet its obligations over the next 12 months. Accordingly, the directors believe the going concern basis to be appropriate for the Q3 financial statements.

Estimates

Certain amounts included in the condensed consolidated interim financial statements involve the use of judgement and/or estimation. These are based on management's best knowledge of the relevant facts and circumstances, having regard to prior experience. However, judgements and estimations regarding the future are a key source of uncertainty and actual results may differ from the amounts included in the financial statements.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2012, with the exception of those highlighted in the exceptional items in notes of these statements.

2. 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 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). Discontinued operations for 2012 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 3).

2. Segmental Reporting

(a) Other cost of sales represents costs not directly attributable to production in the period, including exploration expenditure expensed;

(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.

2. Segmental Reporting (continued)

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

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

2. Segmental Reporting (continued)

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

(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.

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

(e) Other cash movements include cash flows from financing activities, intergroup transfers; and exchange gains or losses.

2. Segmental Reporting (continued)

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

(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.

2. Segmental Reporting (continued)