7 Oct 2010 07:00
AVOCET MINING PLC
SALE OF NON-CORE EXPLORATION ASSETS AND INVESTMENTS
Avocet Mining PLC ("Avocet" or "the Company") announces that it has closed the sale of several non-core exploration assets and investment interests.
The disposals comprise the sale of Avocet's residual equity interests in Merit Mining Corporation ( TSX-V:MEM), expected to complete in late October 2010, and Monument Mining Ltd (TSX-V:MMY). The disposals are expected to result in cash proceeds of approximately US$10.1 million and a small exceptional pre-tax profit. In addition, Avocet has completed the sale of the Houndé Group of licences in exchange for 10,300,000 shares (equivalent to approximately 2.8% of the issued equity) in Avion Gold Corporation("Avion", TSX-V:AVR), as first announced on 29 January 2010.
The disposals announced today are in addition to the disposal of debentures in Merit Mining Corporation and an unrelated disposal of Avocet's interest in Dynasty Gold Corporation, which were announced on 28 July 2010 at the time of the Company's interim results and resulted in an exceptional pre-tax profit of US$2 million.
As previously announced, the Company is conducting a strategic review of its South East Asia assets and expects to announce the result of this review by the end of the year.
Disposal of Houndé exploration licences
The divestment of the Houndé exploration permits in southwest Burkina Faso reflect Avocet's assessment that while Houndé has geological potential it does not adequately satisfy the Company's criteria for development. Avocet's exploration efforts in Burkina Faso will instead be focused on the Belahouro district that surrounds the Inata mine, as this is highly prospective and considered to be better suited to yield large scale additional mineable resources within a short timeframe. Avocet has commenced a 200,000 metre drill programme in the Belahouro district and recently announced positive drill results at the district's Souma Trend as well as increases in Inata's resources and reserves.
Avion is a Canada based gold mining company that holds 80% of the Tabakoto and Segala gold mines in Mali, which Avion expects to produce between 75,000 and 85,000 ounces of gold in 2010. The shares received by Avocet as consideration are conditional upon a mandatory four-month hold period in accordance with the TSX Venture Exchange rules. The shareholding in Avion gives Avocet additional exposure to gold production and exploration in Mali and Burkina Faso in West Africa.
Commenting on the sale of non-core assets, Brett Richards, Chief Executive Officer stated:
"The disposals announced today and in July signify important progress in the Company's drive to simplify its asset base and focus on building a larger business in West Africa, where we have successfully implemented plans to exploit the significant potential of our production and exploration assets."
For further information please contact:
| Avocet Mining PLC | Buchanan Communications | Ambrian Partners Limited | J.P. Morgan Cazenove | Arctic Securities |
| Financial PR Consultants | NOMAD and Joint Broker | Lead Broker | Financial Adviser | |
| Brett Richards, CEO Mike Norris, FD Hans-Arne L'orange, EVP Business Development & Investor Relations | Bobby Morse Katharine Sutton | Richard Brown
| Michael Wentworth-Stanley Anish Patel | Arne Wenger
|
| +44 20 7766 7676 | +44 20 7466 5000 +44 7802 875227 | +44 20 7634 4700 | +44 20 7588 2828 | +47 21013100 |
| www.avocet.co.uk | www.buchanan.uk.com | www.ambrian.com | www.jpmcazenove.com | www.arcticsec.no |
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).
The Company announced in May 2010 that it had initiated exploration within the Inata Mining Licence area and in the surrounding Bélahouro district with the objective of significantly increasing Inata's resource and reserve base as well as investigating the highly prospective Souma Trend, located 20 km from the Inata mill. The Company has a number of other advanced exploration projects in West Africa and South East Asia.
Background to operations
Inata has a Mineral Resource of 1.84 million ounces and an Ore Reserve of 1.08 million ounces. Inata poured first gold in December 2009 and has now reached a steady state production rate in excess of 12,000 ounces per month. Other assets in West Africa include exploration licences in Burkina Faso, Guinea and Mali (the most advanced being the Tri-K gold exploration project in Guinea with a 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.