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Company Information for Avocet Mining PLC
Company stock charts - 12 Month chart
 AIM; AVM
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Company Statement
Avocet is a mining company listed on the AIM market of the London Stock Exchange. The Company's principal activities are gold mining and exploration in Malaysia (as 100% owner of the Penjom mine, the country's largest gold producer) and Indonesia (as 80% owner of the North Lanut gold mine in North Sulawesi).
Avocet currently holds a 20% interest in Dynasty Gold Corporation ("Dynasty") and a 19% interest in Monument Mining Limited. Both companies are listed on the TSX Venture Exchange in Canada.
Current Operations
Indonesia – North Lanut/Bakan
In May 2007 North Lanut passed five million man hours with no lost time injuries (LTI), a significant milestone for the operation. Unseasonal rainfall at the North Lanut operation in early 2006 required the mine to conduct some re-engineering of the waste dumps and storm water ponds for the dump leach. This work was undertaken during the first half of the year. During the same period, heavy rainfall hampered operations with the mine's haulage fleet unable to operate at full capacity. Construction of the second stage heap leach pad continued throughout the period. These factors meant that the amount of ore placed and irrigated on the leach pad in the first half was 11 per cent below the corresponding period in the previous year. This was partly compensated by ore grades 8 per cent above the corresponding period in the previous year, but recovery was 5 per cent lower. This was in line with expectations as the mine is increasingly moving from oxide to transitional/sulphide ore with depth. First half gold production was therefore 9 per cent down on the previous year. The greater focus on waste last year means that stripping in the coming year will be lower.
The mine made the decision to hire articulated dump trucks for ore and waste haulage, and a fleet of six contractor Volvo ADT trucks started operation in the first quarter of 2007. With larger and wider tyres, these trucks are able to operate in very wet weather. This helped place more ore on the leach pad in the second half of the year which was some 35 per cent higher than in the first half. This was still 18 per cent below the corresponding period in the previous year, and although grades were 15 per cent higher than in the second half of the previous year, recoveries were 9 per cent lower. Leach recoveries reduced partly due to a higher proportion of transitional ore leached in the last quarter. Significantly higher levels of material were placed on the pad in the final quarter, which has benefited gold production in the first quarter of the new year. For the year as a whole, gold production of 48,170 ounces was 12 per cent below the previous year. Total operating costs were affected by the abolition of government funded fuel subsidies, which significantly increased diesel prices, while higher amounts of transitional ore leached meant a significant increase in the usage of hydrated lime which is used to control the leach alkalinity. Combined with lower gold production, these factors resulted in cash costs for the year as a whole increasing from US$201/oz last year to US$354/oz.
Decreasing recoveries and the higher costs associated with transitional ore mean that unit costs will continue to come under pressure. The new haulage fleet will help by making production more reliable in wet conditions. Drill and blast will benefit from a new Tamrock Pantera 1100 blast hole drill received and commissioned on site in May, and from the use of emulsion explosives anticipated from August. In addition, the economic benefits of crushing transitional ore are being assessed, with significant recovery improvements expected; engineering has progressed from conceptual to detailed design, and much of the facility can be used at Bakan when mining at North Lanut is complete.
Importantly, and despite the heavy rainfall experienced in the year, environmental compliance was maintained throughout the year. Rehabilitation has been ongoing, with trees being planted around the new second stage leach pad following its completion in February and around the waste dump areas. Revegetation minimises erosion in newly established dump areas. Sediment ponds are being well maintained with regular cleaning, which is an important control for sediment loadings to maintain water discharge compliance.
Malaysia – Penjom
In April 2007 Penjom produced its one millionth ounce of gold, an important milestone for the mine, considering the project's original feasibility study indicated life of mine gold production of 223,000 ounces. Over the last five years, Penjom has successfully increased its resources and reserves on an annual basis. This trend is expected to continue.
The first half of the year was a challenging one due to high stripping and lower mined tonnes and grades than in the previous year. At the start of the year, the Kalampong East pit was near the end of its existing design life. The bottom of the pit was small and becoming congested with the high number of small contractor trucks operating within its narrow width. Prior to this, in November 2005, the Company announced a significant increase in Penjom's life of mine plan to over half a million ounces, which resulted in the design of a much larger pit to allow the additional ounces to be mined. Significant waste stripping was required especially in the first half of the year and this, together with congestion at the bottom of the pit, meant that ore mined in the first six months was less than half of the amount mined in the previous year. Over the same period, the grade of ore mined was also 30 per cent lower. Recoveries in the first half of the year were slightly ahead of the previous year. The second half saw a significant improvement in mined tonnes and grade, although lower mill grades continued to reflect the reduced grades mined earlier in the year.
During the second half of the year, Penjom successfully stepped up both mine and mill production in order to offset the impact of lower feed grades to the mill, and ore mined and milled exceeded the corresponding period in the previous year. Development was advanced to access ore below the east and west wall cutbacks. The grade of ore mined exceeded the previous year; however, high grade ore from the pit was highly carbonaceous and required blending with low grade material to control carbon levels through the mill. A key factor in the second half improvement was Penjom's decision to move to an owner operated haulage fleet. The contractor fleet, comprising 180 trucks of 13 tonne payload, was gradually reduced to 30 trucks on site at the year end, and replaced with 28 new Company owned Renault Kerax units, each with a nominal payload of 30 tonnes. The Kerax trucks are faster, more fuel efficient and lower in terms of unit costs per tonne moved in addition to which the reduced traffic congestion allows the mine to be more productive. Plant recovery in the second half was maintained at over 90 per cent despite lower head grades and a higher proportion of carbonaceous ore.
Geographical Spread
Malaysia – Penjom Gold Mine
Indonesia – North Lanut Gold Mine
Board of Directors and Key Management
| Nigel McNair Scott | (Non-Executive Chairman) |
| Jonathan Henry | (CEO) |
| Mike Norris | (FD) |
| John Newman | (Non Executive Director) |
| Mike Donoghue | (Non Executive Director) |
| Robert Pilkington | (Non Executive Director) |
| Sir Richard Brooke | (Non Executive Director) |
| R S Robertson | (Non Executive Director) |
Company Address7th Floor
|
Additional Address/Key ContactMalaysia |
Annual General Meeting25 September 2008 | Year End31 March |
Nominated BrokersEvolution Securities Limited | Nominated AdvisorsGrant Thornton UK LLP |
Broker/Analyst Reports
14/11/07 - Evolution Securities
Major Shareholders
| Elliot Associates | 16% |
| Artemis | 12.2% |
| JP Morgan | 9.2% |
| AXA | 9.4% |
| Blackrock | 8.0% |
Related News
09/07/08 - With $120 Million Cash As Insulation, Avocet Mining Looks Comfy And Cosy While The Storm Rages Outside13/02/08 - Avocet Is Slowly Expanding Resource and Production Ounces
08/10/07 - Avocet Mining Restructures Gold Collar Position To Achieve Exposure To The Gold Spot Price For 2008 and 2009
11/07/07 - Avocet Mining Set For A Strong Year In 2007/8 Without ZGC
Most Recent Statement
09/07/08 - PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 200802/07/08 - Encouraging Gold Grades From Scout Drilling At Tanoyan, North Sulawesi, Indonesia
20/05/08 - Completion of Banda Transaction Satisfied by Treasury Shares
13/05/08 - AVOCET DRILLING INDICATES POTENTIAL FOR SIGNIFICANT RESOURCE INCREASE AT NORTH LANUT MINE IN INDONESIA
14/04/08 - Fourth Quarter and Full Year Trading Update
01/04/08 - AVOCET UPGRADES RESOURCES AT PENJOM, MALAYSIA WITH CONTINUED DRILLING SUCCESS