AVM.L Regulatory News (AVM)

AVOCET MINING PLC

RESULTS FOR THE QUARTER ENDED 31 MARCH 2011

·; Total gold production of 71,708 ounces in Q1 2011, compared with 70,857 ounces in Q4 2010;

·; Inata production of 47,963 ounces at a cash cost of US$533 per ounce, compared with 46,208 ounces at US$511 per ounce in Q4 2010;

·; Total cash cost of US$678 per ounce, compared with US$641 per ounce in Q4 2010;

·; EBITDA of US$33.0 million in Q1 2011, up from US$29.7 million in the previous quarter Q4 2010;

·; Inata resource increased to 2.12 million ounces; aim remains to double original Inata reserves to 1.8 million ounces by the end of Q3 2011;

·; Positive drilling results from Kodiéran and Koulékoun in Guinea;

·; SE Asia sale - US$110m, out of total consideration of US$200m, now received in escrow but outstanding conditions remain to be satisfied.

Brett Richards, Chief Executive Officer, commented:

"The results from our exploration activities in West Africa have been most encouraging, and are confirming the upside potential for our projects in both Burkina Faso and Guinea. The Inata mine continues to make process efficiency improvements. However, we expect cash costs to increase during the remainder of 2011 as a result of increased mining costs and lower head grades. Work is progressing well towards completion of our plant enhancements, and commissioning of these upgrades is targeted for Q3 2011, without disrupting operations. At the same time, we remain committed to completing the sale of our South East Asian assets as early as possible."

Avocet Mining will host a conference call on Thursday 05 May at 09:00am (London, UK time) to update investors and analysts on its results. Participants may join the call by dialling one of the following three 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 20 3140 0693

Participant pass code: 175331#

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

http://mediaserve.buchanan.uk.com/2011/avocet050511/registration.asp

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 and in the Company's preliminary results statement for 2010, dated 22 February 2011.

Background to operations

The Inata deposit presently comprises a Mineral Resource of 2.12 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. The mine 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.

CHIEF EXECUTIVE OFFICER'S STATEMENT AND OPERATIONAL REVIEW

Overview of Strategic Priorities and Corporate Activities

During the first quarter of 2011 Avocet has focused on advancing its growth plans through exploration to enlarge already established resources in Burkina Faso and in Guinea, delivering on our expansion plans at Inata, and proceeding towards completion of the sale of our South East Asian assets.

Gold production and cash costs

Gold production for the quarter totalled 71,708 ounces, slightly above Q4 2010. Production at Inata benefitted from increased plant throughput and higher grades than expected in the coming quarters, while gold production in South East Asia was marginally below Q4 2010, as higher rainfall impacted operations and recoveries. The Group's average cash cost was US$678 per ounce, six per cent higher than Q4 2010, reflecting higher input costs (particularly fuel) as well as a weakening of the US dollar over the period.

The Group's average realised price was US$1,241 per ounce, compared with US$1,229 per ounce for Q4 2010. During the quarter Inata sold 24,608 ounces into its hedge at US$970 per ounce.

Growth plans

Our organic growth plans are making good progress. During the quarter, Avocet announced excellent drilling results from Kodiéran and Koulékoun in Guinea, as well as positive drill results at Inata which were followed by an announcement in April that the Inata Mine's resource has increased to 2.12 million ounces. We maintain our target of doubling reserves at Inata by the end of Q3 2011, and will continue to provide regular updates over the coming months on the progress of our exploration activities.

The mine-site enhancement work at the Inata plant is proceeding well, and is expected to be completed during Q3 2011. Inata's third mining fleet is also due to be commissioned during the third quarter.

Sale of South East Asian assets

The sale of our South East Asian assets to an Indonesian buyer, J&Partners, was announced on 24 December 2010. Since then efforts have focused on satisfying the conditions precedent for completion of the deal. During the quarter, the US$100 million second tranche of consideration was received in escrow, the final instalment of US$90 million, subject to working capital adjustment, remaining to be paid on completion. On 4 April 2011, Avocet announced that it had been informed a law suit in relation to the transaction had been filed in the Indonesian courts against the Company by PT Lebong Tandai, its partner in some of its assets in Indonesia. The Company has not been served with a law suit but comments attributed to PT Lebong Tandai in the Indonesian press indicate that the basis for a law suit would be that Avocet acted unlawfully by entering into the transaction while still in negotiations with PT Lebong Tandai. Avocet is confident that all actions it has taken in respect of the transaction have been in accordance with prevailing rules and regulations and there are no grounds for any such legal action. Should a law suit be served on Avocet, the Company believes it would be baseless and will defend itself vigorously. The possibility of a law suit represents a challenge to the transaction and the timing of its completion, however, Avocet and J&Partners remain committed to concluding the transaction and discussions continue to seek to minimise the risk posed by the actions of PT Lebong Tandai.

WEST AFRICA REGION

Inata - Burkina Faso

(1) Production statistics include figures for Q1 2010; however cash costs are excluded for Q1 2010, as Inata did not reach commercial production until 1 April 2010.

Gold production in the first quarter of 2011 totalled 47,963 ounces, an increase of four per cent compared with the final quarter of 2010. Production benefitted from an increase in plant throughput, partly reflecting higher than expected plant availability. Although still above the life of mine average, ore grades decreased in the quarter, as expected, and during the rest of the year will continue to fall more in line with the life of mine average. The effect of the reduction in grades will be partially offset in the second half of the year by further increases in plant throughput once the plant enhancements are completed, but gold production in the remaining quarters of 2011 is expected to be lower than in Q1.

Mining continued in the Inata North pit, which contributed the majority of ore tonnes in the quarter, and in the Inata Central pit, where mining started in June 2010. A total of 5.3 million tonnes was mined, which is six per cent higher than Q4 2010. Ore tonnages were in line with expectations, although three per cent down compared to Q4 2010. As mining advances deeper in the pits and harder host rock is encountered, more drilling and blasting has been required.

Mill throughput of 645,000 tonnes represented an average of 318 tonnes per hour, reflecting the plant's ability to operate above its nameplate capacity of 287 tonnes per hour for the second consecutive quarter. Enhancement work at the plant focused on debottlenecking the carbon-in-leach circuit and expanding the elution circuit, in order to provide greater flexibility to process ore at higher throughputs. The third mining fleet, due to be commissioned in Q3 2011, will increase mining capacity to allow ore mining to match the plant's target of 340 tonnes per hour, as well as facilitate increased waste stripping associated with the mine's larger ore reserve, which was announced in September 2010.

Cash costs in the quarter totalled US$533 per ounce, reflecting a higher royalty rate and increased costs of explosives and cyanide compared with Q4 2010. Cash costs for the remainder of 2011 are expected to increase due to higher fuel costs that are affecting the industry as a whole, as well as higher usage of explosives and reagents. In addition, the waste stripping ratio will increase to approximately 13:1 in the high strip period of H2 2011, 2012 and 2013, before normalising towards the life of mine strip ratio of 9:1 in future years. The commissioning and operation of the third mining fleet will add approximately US$65 per ounce to overall mining cash costs for the remainder of the high strip ratio period. As guidance on gold production remains unchanged at 165,000 oz. p.a., the guidance on cash costs is raised to US$600 - US$650 per ounce for the remainder of the high strip period, reducing thereafter.

The recent unrest which has been reported from Burkina Faso has not adversely affected any of the Company's operations in the country.

West African Exploration

Exploration in West Africa focused on two areas: in and around the Inata mine in Burkina Faso; and in the five permits that make up the Tri-K block, as well as the Balandougou permit, in Guinea.

Following positive drill results in the quarter, the Company was able to announce in April an increase in the resource at Inata to 2.12 million ounces as of December 2010. The resource upgrade was the result of infill and step-out drilling in and around the Sayouba and Minfo pits, and along strike to the north of the current Inata North pit. Further drilling continues. Including the 0.56 million ounces of resource at the Souma trend, located 20 kilometres to the east-northeast of the main pit, the total resource within the Bélahouro licence now stands at 2.68 million ounces. The Company believes it is on track for its target of doubling Inata's original 2009 reserves to 1.8 million ounces by the end of Q3 2011.

Exploration in Guinea focussed on the Company's two main licences - Koulékoun and Kodiéran - in the Tri-K block. The Tri-K permits, which are 100 per cent owned by the Company, have been the subject of an airborne geophysical survey similar to that flown at Bélahouro in 2010. The results of the survey are currently being analysed, and will be used to define drill targets at Tri-K

Initial drilling results at Kodiéran, which lies within the southern section of the Tri-K project, were released in February 2011, and included a number of highly promising intersections.

Results of drilling at Koulékoun were released in March 2011, and these indicated that the ore body is broad and tabular, and extends to greater depth than had been originally thought. In addition, drill intersections point to a new zone of mineralisation along a northeast structure in the hanging wall to the main zone. An upgrade to the current resource at Koulékoun, which currently stands at 666,500 ounces, is expected to be announced in Q2 2011.

Elsewhere in Guinea, scout drilling and mapping work continued at Balandougou, located approximately 45 kilometres to the north-east of Koulékoun. Results from this initial activity will be published later in Q2 2011.

SOUTH EAST ASIA REGION

Penjom - Malaysia

Gold production at the Penjom Mine was 11,597 ounces in the first quarter, slightly down compared with the previous quarter. Mining operations remain challenging, while factors such as heavy rainfall, lower fleet availability, and narrow working areas, have contributed to the decrease in tonnes mined. Ore treatment at Penjom continues to be positive, with recoveries of 84 per cent remaining high in spite of lower head grades.

Cash costs in the quarter increased to US$1,194 per ounce, reflecting the lower gold production, but also the impact of higher fuel prices and a weakening of the US dollar against the Malaysian ringgit.

North Lanut - Indonesia

The North Lanut Mine produced 12,148 ounces of gold in the first quarter of 2011, which is slightly less than in the final quarter of 2010. Heavy rainfall throughout the period impacted both mining operations, as pit floors became waterlogged, and treatment operations, as additional reagents were required to counteract the dilutive effects of rain on the leach solution.

Cash costs rose to US$759 per ounce in the quarter, which reflects the lower gold production levels, as well as higher fuel and reagent prices. During April, a strike among the North Lanut workforce resulted in the loss of approximately 3,000 ounces of production.

South East Asian Exploration

South East Asian exploration activities focussed on Doup and Seruyung, which form part of the South East Asian disposal group. A total of US$1.5 million was spent on drilling and other works during the first quarter.

Financial results

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 the assets and liabilities presented separately as a disposal group in the statement of financial position at 31 December 2010 and 31 March 2011, as required by International Financial Reporting Standards (IFRS). 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 quarter of US$20.3 million compared with US$0.2 million in the quarter ended 31 March 2010 and US$9.1 million in the fourth quarter of 2010. The increases arose principally from a full period of Inata operations, whereas the revenues and costs from Inata were capitalised in Q1 2010 whilst the plant was being commissioned prior to the commencement of commercial mining operations.

Net cash generated by operations during the quarter was US$30.2 million compared with a cash outflow of US$9.4 million in Q1 2010 and a cash flow of US$19.8 million in the fourth quarter of 2010. Operating cashflows contributed to capital expenditure at Inata of US$13.8 million, exploration investment of US$10.0 million in West Africa and US$1.5 million in South East Asia, and debt repayments of US$6 million.

Brett A. Richards

(1) 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 2010, 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 2011 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 2011, 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 2010.

The Company's statutory financial statements for the year ended 31 December 2010 are available on the Company's website www.avocet.co.uk. 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 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. By 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 statement of financial position at 31 December 2010 and 31 March 2011. Comparative periods, prior to the signing of the agreement for sale, are not re-presented. 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 and 31 March 2011 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.

From 24 December 2010, the date on which the criteria for being held for sale were met, no depreciation has been charged in the Group financial statements for the Malaysian and Indonesian assets, in accordance with IFRS.

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 3 and provide an analysis of the net profit from discontinued operations, the composition of disposal group assets and liabilities, and cash flows attributable to discontinued operations.

The goodwill and deferred consideration recognised in the consolidated statement of financial position at 31 March 2010 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 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, 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 is for a debt-free cash-free consideration. Therefore, cash held in Malaysian and Indonesian subsidiaries at 31 December 2010 and 31 March has been excluded from held for sales assets, and reported as Group cash in the consolidated statement of financial position.

(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 provisions at Penjom and North Lanut;

(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.