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Company Statement
Avocet is a successful, profitable gold mining company with assets in South East Asia and West Africa. It has two operating gold mines generating strong cash flow, a new mine in the making at Inata, a pipeline of exciting exploration projects in both regions and strong professional management teams in place at each of its business units.
Group Overview
Avocet is a gold mining company which originally listed on the Official List of the London Stock Exchange in 1996 and moved its listing to AIM, part of the London Stock Exchange in July 2002. The Company is incorporated in England and Wales with its principal operates in Burkina Faso, Malaysia and Indonesia.
Avocet’s vision is to be a leading gold mining and exploration company. The Company aims to be at least a 500,000 ounce per annum gold producer, with a portfolio of operations which include long life mines and a broadly sustainable ten year reserve base, all underpinned by a strong financial base and world class practices with regard to health and safety, people, community, the environment and operational performance criteria.
Avocet believes local knowledge and experience, technical expertise, well established relationships with the respective governments and local communities, combined with a pro-active approach to environmental issues, are vital to ongoing success.
In late June 2009, Avocet completed the acquisition of Wega Mining ASA ('Wega') an Oslo listed gold development and exploration company. The acquisition of Wega brings Avocet majority ownership of the Inata Project in northern Burkina Faso, West Africa, which is currently under construction, with first gold production expected in Q3 2009, and full steady state production in FY2011. Wega’s other assets include over 20 exploration licences in Burkina Faso, Guinea and Mali, including the Koulekoun gold exploration project in Guinea which has a NI 43-101 compliant gold mineral resource of 666,500 ounces, a 58.1% interest in TSX Venture Exchange listed Merit Mining and a 35.6% interest in a privately held European base metals exploration company, Metallica Mining AS.
Current Operations
Operations:
Malaysia – Penjom
The Penjom gold mine is Malaysia’s largest gold producer and was developed by Avocet after applying modern technology to grass root exploration 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. The mine was commissioned in December 1996 with reserves of 223,000 ounces. Successful resource development means Penjom has produced over one million ounces of gold to date and still has nearly one million ounces of resource. Avocet was able to overcome initial problems of carbonaceous ore at Penjom by edveloping unique processing systems including complex gravity circuits and resin-in-leach ('RIL') technology. These processes have potential applications at other carbonaceous orebodies. In 2008 Penjom expanded its mining and plant capacity with plant throughput increasing from 570,000 to over 700,000 tonnes per annum to compensate for decreasing mined grades.
The Penjom gold mine is Malaysia’s largest gold producer and was developed by Avocet after applying modern technology to grass root exploration in an area of historic alluvial mining. In 2008 Penjom expanded its mining and plant capacity with plant throughput increasing from 570,000 to over 700,000 tonnes per annum to compensate for decreasing mined grades.
Indonesia – North Lanut
The North Lanut gold mine, located 150 km south-west of Manado, on the north arm of the island of Sulawesi in Indonesia, was developed by Avocet from the exploration stage and has produced over 220,000 ounces since it was commissioned in 2004. Avocet purchased an 80% interest in PT Avocet Bolaang Mongondow ('PT ABM'), an Indonesian company holding a 6th generation CoW from Newmont Mining Corporation in 2002. The North Lanut gold mine is located within the CoW, which includes exploration and mining rights over approximately 50,000 hectares in an area highly prospective for gold. An Indonesian company, PT Lebong Tandai, owns the remaining 20%.
Gold production commenced in October 2004 following a one year construction period. Gold is extracted by heap and dump leach techniques at a production rate of 1,200,000 to 1,400,000 tonnes per annum, with the oxide ore yielding high recoveries and the transitional ore lower recoveries. This treatment process results in no tailings being discharged from the mine site. The fresh, unoxidised ore does not yield sufficiently high recoveries by heap leaching techniques at present, although testwork is being carried out on various processing options. Ore and waste is transported from the Riska, Rasik and Effendi pits by articulated dump trucks, which allows the mine to operate in very wet weather.
Burkina Faso – Inata
In late June 2009, Avocet completed the recommended, share for share, acquisition of Wega Mining ASA (‘Wega’). The main asset of Wega is the 90% owned Inata project in Northern Burkina Faso.
The project is scheduled to be commissioned by Q3 2009. The current life of mine (‘LOM’) plan has determined an operation that will produce at least 120,000 ounces of gold annually over an initial 7 year mine life. Current NI 43-101 mineral resources at Inata are 1,694,000 ounces of gold and the current ore reserves at Inata stand at 944,000 ounces. It is anticipated that additional gold resources from nine exploration licences surrounding the 26 km2 Inata mining permit will be defined in due course for incorporation into the LOM plan. Once the project is in production Avocet is aiming to recommence exploration on the surrounding tenements.
The gold mineralisation at Inata can be traced over a continuous 4km strike length and occurs within silicified volcaniclastic rocks, porphyries and vein quartz that occur within a large shear zone. The 944,000 ounces of proven and probable reserves will be mined from three principal pit areas: Inata North, Central and South. Three smaller pits will be developed during the life of the project.
Conventional drilling, blasting, loading and hauling will be deployed during the mining of each pit through a sequential life-of-mine plan that has been determined from physical properties of the orebodies, the equipment in use and the economics that govern the profitability of the mining. The majority of the ore is soft oxide that will not require blasting. Less than 5% of the reserves are contained in fresh rock.
Exploration:
Indonesia
Bakan Project
The Bakan District is a prospective, epithermal system located approximately 25 km west of the Company’s North Lanut mine on the same CoW. Drilling commenced at Bakan in 2005 and was completed in 2007. An internal pre-feasibility study completed shortly thereafter showed that the project was viable at a production rate of approximately 50,000 ounces per annum over a 4.5 year mine life and warranted a full feasibility study. Since then, delays to the permitting process have been encountered on account of areas of protected forest that overlap one of the two primary deposits. These permitting delays have meant that the start of construction is now likely to be pushed back to beyond 2009. The environmental impact assessment, known locally as an AMDAL, was approved in July 2007. The technical aspects of the project remain robust and the feasibility study remains close to completion pending all permitting approvals. Meanwhile, limited cash resources are being spent on the project.
Doup Project
The Doup project is located in the Kotabunan district, North Sulawesi, approximately 25 km north east of North Lanut. The project is located in an area that is free of restricted forest, which removes a major impediment to its development. Avocet has a 60% economic interest in the project with 40% held by local shareholders.
In February 2009 Avocet announced an Inferred Mineral Resource of 1.0 million ounces at Doup based on 11,288 m of diamond and reverse circulation drilling undertaken in 2007 and 2008. The table below shows the presently defined resource at Doup, which includes the Panang and Benteng prospects.
Avocet is currently undertaking metallurgical test work on 2.8 tonnes of samples from Benteng and Panang. In-fill drilling to 25 metre centres is scheduled to commence once metallurgical investigations are complete with the aim of defining Measured and Indicated Mineral Resources to JORC Code standard.
Seruyung Project
Successful due diligence was completed on the Seruyung project, located in Kalimantan, in 2008. Following this due diligence period, an IP survey commenced in early 2009. Thirteen lines totalling 14,500 m in length were completed. Geological mapping and sampling continued at Ada Isut, Dulun and Block 2, while partial leach soil sampling was completed at Dulun. A drill programme was commissioned with the objective of testing and expanding the resource that previous operators, both Canadian listed, have quoted as being in excess of 300,000 ounces of gold. Avocet can earn up to an 80% interest at Seruyung based on the level of expenditure.
The drill programme at Seruyung was completed in February 2009 with a total of 14 holes for 1,970 m drilled. Metallurgical sampling was completed and the samples dispatched from site to Penjom.
Tanoyan Project
The Tanoyan project, located 7 km west of the Bakan development project in North Sulawesi, Indonesia, is a low-sulphidation epithermal vein system where Avocet is targeting a minimum resource of 500,000 ounces of gold. A 22 hole (2,877 m) scout drilling programme was completed in 2008 with the significant intercepts from this scout drilling programme including:
- Hole TND002 – 10.0m @ 8.81 g/t Au from 31 metres depth
and 20.0m @ 3.13 g/t Au from 138 metres; - Hole TND003 – 13.0m @ 1.39 g/t Au from 70 metres
from a 500-metre segment of the Sondana Vein; and - Hole TND008 – intersected 4.1m @ 3.53 g/t Au from 54.9 metres
and 5.4m @ 2.33 g/t Au from 122.0 metres on the Talong-Modupola Vein.
Malaysia
Exploration around the Penjom mine remains the Company’s priority in Malaysia, although there continues to be an active but low-key generative programme. The latter has led us to a number of grass roots targets in Peninsular Malaysia and East Malaysia which the Company will be pursuing in the next year.
The team has focused exploration efforts in the last year on infill drilling to upgrade the confidence in the resource and facilitate improved life of mine planning.
The Company is currently drilling to 600 metres depth that will enable exploration of the deeper parts of the ore body along and beneath the persistent Penjom Thrust where there is significant potential for a future underground mining operation.
The Philippines
Avocet is currently expanding its exploration presence to the Philippines. In September 2008 the Company signed a Memorandum of Understanding with TSX Venture Exchange-listed Mindoro Resources, giving Avocet the right to earn up to 75% economic interest in the Archangel Project in southern Luzon. Due diligence is ongoing on this new venture.
Burkina Faso
Wega, through its 100%-owned local Burkinabe subsidiaries, holds 18 exploration licences for 3,500 km2. These licences are strategically positioned within two highly prospective gold districts: Belahouro in the north surrounding the Inata gold project and Hounde in the southwest of Burkina Faso.
Belahouro
The nine Belahouro exploration licences (1,770 km2) surround the Inata mining permit where the construction of the Inata gold project is currently being finalised. A renewed exploration programme is liely to discoverother gold resources for development as modern-day exploration procedures have not been applied to the very prospective land-package surrounding the Inata project site. Furthermore, the geology at Inata is reflected at a number of other sites at Belahouro and it is known that some of these contain gold mineralisation. Often, transported sands and gravels obscure gold mineralisation at surface, making the task of finding gold more difficult.
Gold mineralisation at Inata occurs within a well-defined shear zone marking the boundary between the granites and volcanics of the Damba-Inata Domain in the west, and the Sona Sedimentary Basin in the east. The gold mineralisation occurs within silicified metasedimentary and volcaniclastic rocks within the shear zone, and in porphyritic rocks that intrude the shear system. To the south of Inata the shear zone is folded to an E-W orientation. Here, the mineralisation also takes on an E-W orientation (for example at Minfo) where boudinaged pods of quartz vein containing gold can be found. The best example of this is the Minfo and Pali-Minfo trends where shallow RAB drilling has been undertaken.
Hounde
In the south west of Burkina Faso, Avocet has control of 8 exploration licences covering 1,670 km2 of the Hounde Greenstone Belt. This region was selected for intense exploration because it is one of the most prolific gold belts in West Africa, hosting the Mana gold mine (total resources of 2.4 Moz gold) which occurs less than 30 km away from the Hounde group of licences.
Geographical Spread
Malaysia, Indonesia, Burkina Faso and The Philippines
Board of Directors and Key Management
| J G Henry | Chief Executive Officer |
| A M Norris | Finance Director |
| N G McNair Scott | Non-executive Chairman |
| Sir Richard Brooke Bt. | Non-Executive Director |
| J F Newman | Non-Executive Director |
| R A Pilkington | Non-Executive Director |
| M J Donoghue | Non-Executive Director |
| R S Robertson | Non-Executive Director |
Company Address7th Floor
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Additional Address/Key ContactMalaysia |
CapitalNumber of shares in issue; 194,678,676
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Year EndJune |
Nominated BrokersJ.P. Morgan Cazenove | Nominated AdvisorsAmbrian Partners Limited |
Major Shareholders
| Elliott Associates | 16.4% |
| Datum A.S. | 12.2% |
| J.P. Morgan | 6.3% |
| BlackRock | 5.2% |
| Management | 5.0% |
| Artemis | 3.5% |
| Invesco | 3.2% |
Related News
02/03/10 - Avocet Mining Looks All Set To Become Aim’s Biggest Gold Producer By The Middle Of This Year17/11/09 - Avocet Mining Heads Tentatively Towards Production Of Over 200,000 Ounces Of Gold Per Year
15/04/09 - Avocet Mining Buys West Africa Specialist Wega Gold To Take Production Up Towards 300,000 Ounces Of Gold Per Year
09/07/08 - With $120 Million Cash As Insulation, Avocet Mining Looks Comfy And Cosy While The Storm Rages Outside
13/02/08 - Avocet Is Slowly Expanding Resource and Production Ounces
Most Recent Statement
26/02/10 - Avocet ships first gold from Inata29/01/10 - Q3 Gold Production
07/01/10 - Directors' Dealings
05/01/10 - Holding(s) in Company
22/12/09 - Avocet Pours First Gold at Inata in Burkina Faso
13/11/09 - Sale of interest in Merit Mining