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Company Avocet Mining PLC
TIDM AVM
Headline Unaudited Results for Quarter ended 30 Sept 2012
Released 07:00 01-Nov-2012
Number 0358Q07

RNS Number : 0358Q
Avocet Mining PLC
01 November 2012
 



 

 

 

 

 

 

Avocet Mining Unaudited Results for
the Quarter ended 30 September 2012

 

·           Operational improvements at Inata yield increase in mining volumes of 11%

·           Gold production of 33,067 oz. (Q2 2012: 32,917 oz.) at cash costs US$937 per oz.
(Q2 2012: US$1,006 per oz.)

·           Net cash generated by operating activities lower at US$1.4 million (Q2 2012:
US$20.7 million) due to timing of supplier payments

·           EBITDA of US$6.3 million (Q2 2012: US$8.7 million), as gold inventory reduces by
US$5.6 million over the quarter

·           Cash of US$62.0 million, with external debt reduced to US$11.0 million

·           Results from Inata metallurgical testwork received

·           Anticipated reduction in Inata Mineral Reserves at Inata makes expansion unlikely in the short term - engineering now focused on recovery enhancements at existing plant

·           Group total Mineral Resources increased 23% to 7.70 million oz.

 

KEY FINANCIAL METRICS

Period

Quarter ended

30 September

 2012

Unaudited

Quarter ended

30 September

 2011

Unaudited

Quarter ended

30 June

 2012

Unaudited

Quarter ended

30 June

 2011

Unaudited

Gold production (ounces)

33,067

33,256

32,917

39,423

Average realised gold price (US$/oz.)

1,506

1,316

1,439

1,161

Cash production costs (US$/oz.)

937

830

1,006

677

Profit/(loss) before tax (US$000)

(323)

(33,540)

2,458

14,862

Earnings per share  (US cents per share)

(0.46)

(11.87)

0.81

6.32

EBITDA2 (US$000)

6,281

14,952

8,679

16,600

Net cash generated by operating activities (US$000)

1,411

2,658

20,717

2,414

[1] Key Financial Metrics are presented for continuing operations only, and represent results excluding the Group's former operations in South East Asia, which were sold in June 2011.  Refer to note 2 of these interim financial statements for further information.

2 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.

 

David Cather, Chief Executive Officer, commented:

 

"Our main focus in the third quarter has been driving operational improvements at Inata.  This has begun to bear fruit, with a noticeable increase in mining volumes in the quarter.  Further operating efficiency gains in both mining and processing are expected to be achieved in the coming months. 

 

Engineering cost studies on an expansion at Inata have progressed.  The early indications from these studies, as well as the anticipated reduction in Mineral Reserves are informing our views on an optimal expansion strategy.  Accordingly, our earlier ambition to expand production through the construction of a second processing plant appears unlikely in the near term.  Instead our focus has turned to optimising the existing plant, while adding Mineral Reserves at Souma and elsewhere in the Bélahouro district."

 

 

FOR FURTHER INFORMATION PLEASE CONTACT

 

Avocet Mining PLC

Pelham Bell Pottinger
Financial PR Consultants

J.P. Morgan Cazenove
Lead Broker

Arctic Securities
Financial Adviser & Market Maker

SEB Enskilda
Financial Adviser &
Market Maker

David Cather, CEO
Mike Norris, FD
Angela Parr, IR

Daniel Thöle
Joanna Boon

Michael Wentworth-Stanley
Neil Passmore

Arne Wenger
Petter Bakken

Fredrik Cappelen

+44  20 7766 7676

+44 20 7861 3232 

+44 20 7588 2828

+47 2101 3100

+47 2100 8500

 

NOTES TO EDITORS

 

Avocet Mining 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 3.99 million ounces and a Mineral Reserve of 1.85 million ounces.  The Inata Gold Mine poured its first gold in December 2009 and produced 167,000 ounces of gold in 2011 and is expected to produce 135,000 - 140,000 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 are Souma, some 20 kilometres from the Inata Gold Mine, and Filio, adjacent to the mine licence area,  where Mineral Resources of 0.56 million ounces and 0.14 million ounces respectively exist.

In Guinea, Avocet owns twelve exploration licences in the north east of the country.  Mineral Resource development has been ongoing since 2005 and the project at Tri-K is the most advanced.  Within the Tri-K project, Koulékoun has a Mineral Resource of 2.15 million ounces and Kodiéran of 0.87 million ounces.

 

CHIEF EXECUTIVE OFFICER'S REVIEW

 

We made some encouraging operational improvements at Inata during the third quarter, with our new management team working effectively with consultants Alexander Proudfoot.  Mining operations, which underperformed earlier in the year due to a combination of poor equipment availability and sub-optimal operating practices, achieved an increase in average daily volumes of 11%.  The challenge now is to achieve and exceed this level on a consistent basis into 2013.

 

The metallurgical testwork associated with the Inata expansion scoping study has yielded extensive results.  This testwork involved the taking of 5,000 samples from across the ore body which were analysed for PRI (Preg Robbing Index), Quick Leach Test, sulphurs, carbon and a suite of other minerals.  Analysis of this data has been used to generate block models of the various geological and metallurgical parameters across the ore body.

 

The metallurgical testwork identified two main factors affecting gold recoveries namely: preg-robbing by active carbonaceous material and fine grained gold locked up in sulphide ores.  The testwork indicates that there is a significant proportion of the ore body (50 - 60%) which is regarded as having very low to no preg-robbing capacity, while less than 3% of the ore body is considered highly preg-robbing.  The testwork also indicates that processing options identified would achieve acceptable recoveries for ore with low preg-robbing capacity, with only a minor drop in recoveries when treating the highly preg-robbing ore.  Accordingly a number of potential processing options have been identified, developed using conventional techniques that can deliver acceptable recoveries across the ore body.

 

The Company is re-estimating its Mineral Reserves at Inata using current cost levels and the lower forecast metallurgical recoveries that have been estimated as a result of the metallurgical testwork.  These factors are likely to negatively influence the estimate, with the result that Mineral Reserves are expected to decrease from the 1.85 million ounces previously announced.  Although engineering work has not yet been completed, the anticipated reduction in Mineral Reserves indicates that the significant investment that would be required for a new processing plant is unlikely to provide a satisfactory return.  Accordingly engineering studies are now focused on optimising operations at the current plant, including more modest capital expenditure..

 

The 2011/2012 drilling season was completed in the second quarter of 2012 and revised Mineral Resource estimates for operations in Burkina Faso and Guinea were recently announced.  At Bélahouro, Burkina Faso, Mineral Resources increased by 17% to 4.69 million ounces, of which 3.99 million ounces are within the Inata mine licence area.  Infill and step-out drilling is ongoing at Souma where a Mineral Resource update is anticipated in Q1 2013.  The ongoing evaluation of Souma, that includes metallurgical testwork, has been prioritised with a view to submitting an application for a mining licence in 2013.

 

The Mineral Resources in Guinea also increased, growing 34% to 3.02 million ounces at Koulékoun and Kodiéran in the Tri-K region.  Constructive discussions with the Guinean Government continued during the quarter and the Ministry of Mines and Geology has granted Avocet an extension to its Koulékoun exploration licence to the third quarter of 2013.  A revised mining code is widely anticipated but not yet confirmed.  We have commenced the environmental studies and have started the metallurgical testwork programme both of which will form part of the feasibility study, which the decision has been taken to progress.

 

On 19 September 2012 the second Indonesian civil case brought by PT Lebong Tandai (PTLT) against Avocet and other parties in April 2012 was dismissed by the South Jakarta District Court, on the grounds of lack of jurisdiction.  PTLT has appealed the District Court's decision, as it did after the first case was similarly dismissed in 2011.  The Company has no knowledge of when either appeal may be heard by the High Court of Indonesia.

 

 

OPERATIONAL REVIEW

 

Gold production and cash costs


2012



2011


Q3

Q2

Q1

2012 YTD

FY 2011

Ore mined (k tonnes)

559

610

578

1,747


2,494

Waste mined (k tonnes)

7,565

6,689

7,240

21,494


22,707

Total mined (k tonnes)

8,124

7,299

7,818

23,241


25,201

Ore processed (k tonnes)

643

651

608

1,902


2,471

Average head grade (g/t)

1.62

1.82

2.36

1.93


2.26

Process recovery rate

91%

86%

87%

88%


91%

Gold Produced (oz.)

33,067

32,917

38,296

104,280

166,744








Cash costs (US$/oz.)

Q3

Q2

Q1

2012 YTD


FY2011

Mining

374

402

332

367


217

Processing

279

332

283

297


244

Administration

167

145

122

144


139

Royalties

117

127

113

119


93


937

1,006

850

927

693

 

Gold production in the quarter was 33,067 ounces, in line with the previous quarter.  This was ahead of expectations as gold in circuit was drawn down by 2,630 ounces.

 

Daily mining volumes improved by some 11% compared with Q2 2012, as a result of a programme of operating improvement initiatives implemented in conjunction with Alexander Proudfoot as well as the commissioning of additional rented equipment in September.  These initiatives included revised haul cycles, operator training programmes, improved supervisor monitoring, loading optimisation and a detailed revision of standard operating practices. Total mining volumes of 8,124,000 tonnes averaged approximately 88,000 tonnes per day across the quarter as a whole, up from 80,000 per day in Q2 2012.  By the quarter end, daily production in excess of 110,000 tonnes was achieved on a number of days.  Although a programme of haul truck maintenance is planned for Q4 2012, efforts to achieve further volume improvements will continue in the quarter.

 

Plant throughput was in line with the previous quarter as plant availability remained good with only scheduled maintenance and minor outages.  As expected, head grades were lower at 1.62 g/t Au during the quarter, down 11% compared with Q2 2012.  However, recoveries of 91% were higher than the previous quarter, reflecting mining of predominantly oxide ore which leaches more easily.

 

Cash costs were US$937 per ounce in the quarter.  Whilst cost savings were achieved on reagent consumption and operating efficiency improvements, overall cash costs reduced by lower maintenance activity and less grade control drilling, both of which are expected to reverse in Q4 2012.  Included in cash costs were fees paid to Alexander Proudfoot, whose work at Inata will continue until Q1 2013.  Full year production guidance is maintained at 135,000 - 140,000 ounces at a cash cost of US$1,000 to 1,050 per ounce.

 

Whilst the political situation in Northern Mali, which is to the north of the Inata mine, remains unstable Inata has not been affected by the ongoing unrest. 

 

Exploration

With the advent of the rainy season, little drilling has been undertaken either in Burkina Faso or in Guinea during the third quarter.  Instead, work focused on analysing the samples collected during the 2011/2012 field season, and modelling the results.  This work culminated in the Mineral Resource increase of 23% to 7.70 million ounces announced on 25 October.  The Company is re-estimating its Mineral Reserves at Inata using current cost levels and lower forecast metallurgical recoveries.  As highlighted these factors are likely to negatively influence the Mineral Reserves estimate.

 

During the fourth quarter, exploration activities will focus on completing the drilling at Filio, where a maiden resource was recently announced, and developing the resources at Souma through step-out and infill drilling.

 

 

FINANCIAL REVIEW

 

Revenue in the quarter was US$50.1 million, reflecting sales of 33,298 ounces of gold at an average realised price of US$1,506 per ounce, (including 8,250 ounces into forward contracts at US$950 per ounce), compared to revenue of US$49.3 million in Q2 2012, representing 34,218 ounces at an average realised price of US$1,439 per ounce.  At the quarter end Avocet's outstanding hedge was 189,750 ounces.

 

EBITDA for the quarter totalled US$6.3 million, compared with US$8.7 million in Q2 2012. Although cash costs were lower in the period, this was offset by adverse movements in both stockpile (as the mining schedule delivered less ore to the stockpile), and by gold inventory, which largely reflects the timing of gold pours, shipments and sales.

 

Negative working capital movements contributed to net cash from operating activities being US$1.4 million in the quarter, compared with US$20.7 million in Q2 2012. In particular, the quarter on quarter timing of supplier payments accounted for a decrease in cash flow of US$19.2 million, as the positive movement in Q2 of US$11.6 million was followed by a negative movement in Q3 of US$7.6 million.  However, on a year to date basis, movement in creditors is US$1.5 million positive, as quarterly movements offset each other.  During Q3, US$8.9 million was invested in capital expenditure, the bulk of which was on the second tailings facility at Inata, and only US$4.9 million on exploration.

 

 

At the end of the period, the cash balance stood at US$62.0 million, with debt reduced to US$11.0 million, leaving net cash at US$51.0 million, compared with US$63.4 million at the end of Q2 2012.

 

As noted in the Company's Interim Results announcement, in anticipation of Inata's existing project finance facility with Macquarie Bank being fully repaid by March 2013, discussions are in progress with various lenders, including Macquarie Bank, with a view to replacing the existing facility.  A new financing facility would be used for standby and Inata development purposes.  The amount of funding required for Inata development will depend on the outcome of the ongoing studies outlined above.

 

OUTLOOK

 

In view of our encouraging progress, we retain our guidance for 2012 and 2013, and believe that our efforts over the coming months will re-establish Inata as a strong cash generative operation.  In the meantime, the receipt of the metallurgical testwork along with initial process flow sheet designs is enabling management and the Board to evaluate the optimal means by which to further develop Inata.

 

 

 

DAVID CATHER

Chief Executive Officer

 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

For the three months ended 30 September 2012




Three months ended 30 September 2012

Unaudited

Three months ended 30 September 2011

Unaudited










Note

Continuing operations

Discontinued operations(1)

Total

Continuing operations

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000









Revenue

3

50,146

-

50,146

42,413

-

42,413

Cost of sales

3

(45,689)

-

(45,689)

(32,567)

(939)

(33,506)

Gross profit/(loss)


4,457

-

4,457

9,846

(939)

8,907

Administrative expenses


(3,630)

-

(3,630)

(2,295)

-

(2,295)

Share based payments


(517)

-

(517)

(387)

-

(387)

Profit/(loss) from operations


310

-

310

7,164

(939)

6,225

Profit on disposal of investments

2

-

-

-

-

2,427

2,427

Profit on disposal of subsidiaries

2

-

-

-

-

12,995

12,995

Restructure of hedge

13

-

-

-

(39,757)

-

(39,757)

Finance items








Exchange gains


76

-

76

24

-

24

Finance expense


(720)

-

(720)

(991)

-

(991)

Finance income


11

-

11

20

-

20

Net finance items - discontinued operations


-

-

-

-

(7)

(7)

(Loss)/profit before taxation


(323)

-

(323)

(33,540)

14,476

(19,064)

Analysed as:








(Loss)/profit before taxation and exceptional items


(323)

-

(323)

6,217

(946)

5,271

Exceptional items

13

-

-

-

(39,757)

15,422

(24,335)

(Loss)/profit before taxation


(323)

-

(323)

(33,540)

14,476

(19,064)

Taxation


(486)

-

(486)

7,323

-

7,323

(Loss)/profit for the period


(809)

-

(809)

(26,217)

14,476

(11,741)









Attributable to:

Equity shareholders of the parent company


(918)

-

(918)

(23,635)

14,518

(9,117)

Non-controlling interest


109

-

109

(2,582)

(42)

(2,624)



(809)

-

(809)

(26,217)

14,476

(11,741)









Earnings per share








- basic (cents per share)

4

(0.46)

-

(0.46)

(11.87)

7.29

(4.58)

- diluted (cents per share)

4

(0.46)

-

(0.46)

(11.87)

7.17

(4.58)









EBITDA(2)


6,281

-

6,281

14,952

(939)

14,013

(1)       During 2011, the Group disposed of all of its trading subsidiaries which were classified as discontinued operations.  All operations for 2012 are continuing.   Refer to note 2 for further information.

(2)       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 INCOME STATEMENT

For the nine months ended 30 September 2012




Nine months ended 30 September 2012

Unaudited

Nine months ended 30 September 2011 Unaudited










Note

Continuing operations

Discontinued operations(1)

Total

Continuing operations

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000









Revenue

3

159,657

-

159,657

142,929

67,236

210,165

Cost of sales

3

(124,430)

-

(124,430)

(106,055)

(51,101)

(157,156)

Gross profit


35,227

-

35,227

36,874

16,135

53,009

Administrative expenses


(8,950)

-

(8,950)

(7,101)

-

(7,101)

Share based payments


(1,547)

-

(1,547)

(1,053)

-

(1,053)

Profit from operations


24,730

-

24,730

28,720

16,135

44,855

Profit on disposal of investments

7,13

-

-

-

8,990

2,427

11,417

(Loss)/profit on disposal of subsidiaries

2,13

-

(105)

(105)

-

85,802

85,802

Restructure of hedge

13

-

-

-

(39,757)

-

(39,757)

Finance items








Exchange gains/(losses)


440

-

440

(58)

-

(58)

Finance expense


(2,321)

-

(2,321)

(4,023)

-

(4,023)

Finance income


125

-

125

20

-

20

Net finance items - discontinued operations


-

-

-

-

(26)

(26)

Profit/(loss) before taxation


22,974

(105)

22,869

(6,108)

104,338

98,230

Analysed as:








Profit before taxation and exceptional items


22,974

-

22,974

24,659

16,109

40,768

Exceptional items

12

-

(105)

(105)

(30,767)

88,229

57,462

Profit/(loss) before taxation


22,974

(105)

22,869

(6,108)

104,338

98,230

Taxation


(7,959)

-

(7,959)

2,721

(2,723)

(2)

Profit/(loss) for the period


15,015

(105)

14,910

(3,387)

101,615

98,228









Attributable to:

Equity shareholders of the parent company


13,290

(105)

13,185

(2,160)

99,448

97,288

Non-controlling interest


1,725

-

1,725

(1,227)

2,167

940



15,015

(105)

14,910

(3,387)

101,615

98,228









Earnings per share








- basic (cents per share)

4

6.68

(0.05)

6.63

(1.09)

49.98

48.90

- diluted (cents per share)

4

6.64

(0.05)

6.59

(1.09)

49.07

48.00









EBITDA(2)


43,061

-

43,061

56,955

16,135

73,090

(1)       During 2011, the Group disposed of all of its trading subsidiaries in South East Asia, which were classified as discontinued operations.  All operations for 2012 are continuing.  In Q1 2012 the Group completed the disposal of one of the remaining exploration assets in South East Asia.  Refer to note 2 for further information.

(2)       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 COMPREHENSIVE INCOME

For the three months ended 30 September 2012




Three months ended 30 September 2012

Unaudited

Three months ended 30 September 2011

Unaudited


Note

Continuing operations

Discontinued operations

Total

Continuing operations

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000









(Loss)/profit for the period


(809)

-

(809)

(26,217)

14,476

(11,741)

Revaluation of other financial assets

7

(172)

-

(172)

-

-

-

Total comprehensive income for the period


(981)

-

(981)

(26,217)

14,476

(11,741)









Attributable to:








Equity holders of the parent company


(1,090)

-

(1,090)

(23,635)

14,518

(9,117)

Non-controlling interest


109

-

109

(2,582)

(42)

(2,624)



(981)

-

(981)

(26,217)

14,476

(11,741)









 

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the nine months ended 30 September 2012




Nine months ended 30 September 2012

Unaudited

Nine months ended 30 September 2011

Unaudited


Note

Continuing operations

Discontinued operations

Total

Continuing operations

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000









Profit/(loss) for the period


15,015

(105)

14,910

(3,387)

101,615

98,228

Revaluation of other financial assets

7

(776)

-

(776)

(2,903)

-

(2,903)

Disposal of other financial assets


-

-

-

(9,725)

-

(9,725)

Reclassification of foreign exchange translation reserve on disposal of subsidiaries

2

-

-

-

(627)

-

(627)

Total comprehensive income for the period


14,239

(105)

14,134

(16,642)

101,615

84,973









Attributable to:








Equity holders of the parent company


12,514

(105)

12,409

(15,415)

99,448

84,033

Non-controlling interest


1,725

-

1,725

(1,227)

2,167

940



14,239

(105)

14,134

(16,642)

101,615

84,973









 

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 September 2012






Note

30 September 2012

Unaudited

31 December

2011

Audited

30 September 2011

Unaudited



US$000

US$000

US$000

Non-current assets





Intangible assets

5

50,655

42,390

32,543

Property, plant and equipment

6

270,856

247,954

252,326

Other financial assets

7

1,052

1,828

2,313

Deferred tax assets


-

-

1,459



322,563

292,172

288,641

Current assets





Inventories

8

52,820

40,515

40,650

Trade and other receivables

9

27,158

28,529

22,689

Cash and cash equivalents

10

62,043

105,236

120,373



142,021

174,280

183,712






Assets of disposal group classified as held for sale

2,3

-

2,085

1,935






Current liabilities





Trade and other payables


29,545

25,544

45,767

Other financial liabilities

11

11,704

24,711

24,000



41,249

50,255

69,767











Non-current liabilities





Other financial liabilities

11

2,508

8,018

11,000

Deferred tax liabilities


22,525

14,566

6,007

Other liabilities


5,143

5,143

3,737



30,176

27,727

20,744

Net assets


393,159

390,555

383,777

Equity





Issued share capital


16,247

16,247

16,247

Share premium


149,915

149,915

149,915

Other reserves


15,411

15,273

15,614

Retained earnings


208,870

208,129

201,772

Total equity attributable to the parent


390,443

389,564

383,548

Non-controlling interest


2,716

991

229

Total equity


393,159

390,555

383,777

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

Nine  months ended 30 September 2012


Share capital

Share premium

Other reserves

Retained earnings

Total attributable to the parent

Non-controlling interest

Total equity


US$000

US$000

US$000

US$000

US$000

US$000

US$000

At 31 December 2011 (Audited)


16,247

149,915

15,273

208,129

389,564

991

390,555

Profit for the period


-

-


13,185

13,185

1,725

14,910

Revaluation of other financial assets


-

-

(776)

-

(776)

-

(776)

Total comprehensive income for the period


-

-

(776)

13,185

12,409

1,725

14,134

Share based payments


-

-

-

1,942

1,942

-

1,942

Release of treasury and own shares


-

-

914

(865)

49

-

49

Exercise of share options


-

-

-

(16)

 

(16)

 

-

(16)

Final dividend


-

-

-

(13,505)

(13,505)

-

(13,505)

At 30 September 2012 (Unaudited)


16,247

149,915

15,411

208,870

390,443

2,716

393,159

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

Nine months ended 30 September 2011


Share capital

Share premium

Other reserves

Retained earnings

Total attributable to the parent

Non-controlling interest

 

Total equity


US$000

US$000

US$000

US$000

US$000

US$000

US$000

At 31 December 2010 (Audited)


16,086

144,571

30,632

118,606

309,895

9,344

319,239

Profit for the period


-

-

-

97,288

97,288

940

98,228

Revaluation of other financial assets


-

-

(2,903)

-

(2,903)

-

(2,903)

Disposal of other financial assets


-

-

(9,725)

-

(9,725)

-

(9,725)

Reclassification of foreign exchange translation reserve on disposal of subsidiaries


-

-

(627)

-

(627)

-

(627)

Total comprehensive income for the period


-

-

(13,255)

97,288

84,033

940

84,973

Share based payments


-

-

-

1,001

1,001

-

1,001

Interim dividend


-

-

-

(6,814)

(6,814)

-

(6,814)

Issue of shares - exercise of share options


35

-

-

-

35

-

35

Issue of shares - bonuses


75

3,177

-

(3,200)

52

-

52

Issue of shares into EBT


51

2,167

(2,218)

-

-

-

-

Purchase of treasury shares


-

-

(2,910)

-

(2,910)

-

(2,910)

Release of EBT and treasury shares


-

-

1,373

(487)

886

-

886

Net exercise of share options settled in cash


-

-

-

(2,630)

(2,630)

-

(2,630)

Non-controlling interest share of dividend from subsidiary


-

-

-

-

-

(2,000)

(2,000)

Disposal of subsidiaries


-

-

-

-

-

(8,055)

(8,055)

Transfer acquisition reserve


-

-

1,992

(1,992)

-

-

-

At 30 September 2011 (Unaudited)


16,247

149,915

15,614

201,772

383,548

229

383,777

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

 



Three months ended 30 September 2012

Unaudited

Three months ended 30 September 2011

Unaudited










Note

Continuing operations

Discontinued operations

Total

Continuing operations

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

Cash flows from operating activities








(Loss)/profit for the period


(809)

-

(809)

(26,217)

14,476

(11,741)

Adjusted for:








Depreciation of non-current assets

3

5,971

-

5,971

7,788

-

7,788

Share based payments


517

-

517

386

-

386

Taxation in the income statement


486

-

486

(7,323)

-

(7,323)

Non-operating items in the income statement

12

1,796

-

1,796

41,054

(15,423)

25,631



7,961

-

7,961

15,688

(947)

14,741

Movements in working capital








Increase in inventory


(111)

-

(111)

(12,783)

-

(12,783)

Decrease in trade and other receivables


1,396

-

1,396

4,481

529

5,010

Decrease in trade and other payables


(7,596)

-

(7,596)

(4,198)

(1,008)

(5,206)

Net cash generated by operations


1,650

-

1,650

3,188

(1,426)

1,762

Interest received


-

-

-

20

-

20

Interest paid


(239)

-

(239)

(550)

-

(550)

Net cash generated by operating activities


1,411

-

1,411

2,658

(1,426)

1,232

Cash flows from investing activities








Payments for property, plant and equipment

3

(8,876)

-

(8,876)

(18,586)

3

(18,583)

Exploration and evaluation expenses

3,5

(4,871)

-

(4,871)

(2,796)

-

(2,796)

Disposal of discontinued operation, net of cash disposed of

2

-

-

-

18,856

-

18,856

Net cash (used in)/generated by investing activities


(13,747)

-

(13,747)

(2,526)

3

(2,523)

Cash flows from financing activities








Restructure of hedge


-

-

-

(39,757)

-

(39,757)

Settlement of share options in cash


(14)

-

(14)

(2,471)

-

(2,471)

Purchase of treasury shares


-

-

-

(2,910)

-

(2,910)

Loans repaid

11

(6,000)

-

(6,000)

(6,000)

-

(6,000)

Dividend


-

-

-

(6,505)

-

(6,505)

Payments in respect of finance leases


(63)

-

(63)

-

-

-

Net cash used in financing activities


(6,077)

-

(6,077)

(57,643)

-

(57,643)

Net cash movement


(18,413)

-

(18,413)

(57,511)

(1,423)

(58,934)

Exchange gains/(losses)


76

-

76

23

(9)

14

Transfer of cash not held for sale

2,3

-

-

-

(1,432)

1,432

-

Total decrease in cash and cash equivalents


(18,337)

-

(18,337)

(58,920)

-

(58,920)

Cash and cash equivalents at start of the period


80,380

-

80,380

179,293

-

179,293

Cash and cash equivalents at end of period


62,043

-

62,043

120,373

-

120,373

 

 

 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

 



Nine months ended 30 September 2012

Unaudited

Nine months ended 30 September 2011

Unaudited


Note

Continuing operations

Discontinued operations

Total

Continuing operations

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

Cash flows from operating activities








Profit/(loss) for the period


15,015

(105)

14,910

(3,387)

101,615

98,228

Adjusted for:








Depreciation of non-current assets

6

18,331

-

18,331

28,235

-

28,235

Share based payments


1,547

-

1,547

1,053

-

1,053

Provisions


-

-

-

-

574

574

Taxation in the income statement


7,959

-

7,959

(2,721)

2,723

2

Non-operating items in the income statement

12

3,746

105

3,851

35,066

(88,404)

(53,338)



46,598

-

46,598

58,246

16,508

74,754

Movements in working capital








(Increase)/decrease in inventory


(12,305)

-

(12,305)

(20,270)

341

(19,929)

Decrease/(increase) in trade and other receivables


1,055

-

1,055

(6,102)

(745)

(6,847)

Increase/(decrease) in trade and other payables


1,460

-

1,460

2,477

(1,256)

1,221

Net cash generated by operations


36,808

-

36,808

34,351

14,848

49,199

Interest received


138

-

138

20

17

37

Interest paid


(966)

-

(966)

(2,494)

-

(2,494)

Income tax paid


-

-

-

(865)

(3,679)

(4,544)

Net cash generated by operating activities


35,980

-

35,980

31,012

11,186

42,198

Cash flows from investing activities








Payments for property, plant and equipment

6

(22,592)

-

(22,592)

(40,582)

(881)

(41,463)

Deferred consideration paid


-

-

-

-

(1,330)

(1,330)

Exploration and evaluation expenses

3,5

(26,907)

-

(26,907)

(22,027)

(2,995)

(25,022)

Rehabilitation costs


-

-

-

-

(393)

(393)

Disposal of discontinued operation, net of cash disposed of

2

1,980

-

1,980

177,007

-

177,007

Net cash received from disposal of other investments

7

-

-

-

16,501

-

16,501

Net cash (used in)/generated by investing activities


(47,519)

-

(47,519)

130,899

(5,599)

125,300

Cash flows from financing activities








Proceeds from issue of equity shares


-

-

-

35

-

35

Restructure of hedge


-

-

-

(39,757)

-

(39,757)

Settlement of share options in cash


(155)

-

(155)

(2,471)

-

(2,471)

Purchase of treasury shares


-

-

-

(2,910)

-

(2,910)

Loans repaid

11

(18,000)

-

(18,000)

(43,000)

-

(43,000)

Dividend


(13,166)

-

(13,166)

(6,505)

-

(6,505)

Payments in respect of finance leases


(434)

-

(434)

-

-

-

Non-controlling interest share of dividend from subsidiary


-

-

-

-

(2,000)

(2,000)

Net cash used in financing activities


(31,755)

-

(31,755)

(94,608)

(2,000)

(96,608)

Net cash movement


(43,294)

-

(43,294)

67,303

3,587

70,890

Exchange gains/(losses)


101

-

101

206

(246)

(40)

Transfer of cash not held for sale

2,3

-

-

-

3,341

(3,341)

-

Total (decrease)/increase in cash and cash equivalents


(43,193)

-

(43,193)

70,850

-

70,850

Cash and cash equivalents at start of the period


105,236

-

105,236

49,523

-

49,523

Cash and cash equivalents at end of period


62,043

-

62,043

120,373

-

120,373

 

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 2011, 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 2012 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 2012, 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 2011.

 

The Company's statutory financial statements for the year ended 31 December 2011 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.

 

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 June 2011, Avocet completed the sale of its main South East Asian assets, namely its 100% interest in the Penjom gold mine in Malaysia and its 80% interest in PT Avocet Bolaang Mongondow (PT ABM), which owned the North Lanut mine and Bakan project in North Sulawesi, Indonesia, for proceeds of US$170 million.  In the third quarter of 2011, Avocet announced that further sales had been concluded, namely PT Avocet Mining Services, Avocet Mining (Malaysia) OHQ Sdn. Bhd., its 75% interest in PT Gorontalo Sejahtera Mining, and its 60% interest in PT Arafura Surya Alam.  The combined gross proceeds for the disposals completed in the third quarter of 2011 were US$27 million.  All of the sales completed in 2011 were originally announced on 24 December 2010.

 

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, were treated as a disposal group from the date of the announcement of the sale on 24 December 2010, and were disclosed separately in the statement of financial position at 31 December 2010 and 31 March 2011, and the remaining unsold entities were disclosed separately at 30 June 2011, 30 September 2011, and 31 December 2011.  As the transaction was on a cash free debt free basis, the cash held by entities held for sale was classified as continuing operations rather than discontinued operations.  Prior to the reclassification, management reviewed the carrying values and recognition of assets and liabilities respectively, and no adjustments were required to measure assets and liabilities at the lower of carrying value or fair value less costs to sell.  Since 24 December 2010, the date on which the criteria for being held for sale were met, no depreciation was charged in the Group financial statements for the Malaysian and Indonesian assets, in accordance with IFRS.

 

In 2011, Avocet completed the sale of PT Arafura Mandiri Semangat (PT Arafura) and PT Aura Celebes Mandiri (PT ACM) to Reliance Resources Limited, a company owned by Golden Peaks Resources Limited (Golden Peaks).  Consideration was in the form of 7.9 million Golden Peaks shares, which are classed as available for sale financial assets and are recognised at fair value at the reporting date (note 7).  Golden Peaks announced that it had changed its name to Reliance Resources in January 2012.  Reliance Resources is listed on the Toronto Stock Exchange. PT AMS and PT ACM held non-core exploration projects in Indonesia. 

The results of the disposal group are presented separately in the comparative consolidated income statement and the segmental analysis, as required by IFRS.

The profit on disposal of the entities sold during 2011 is presented in full in the annual report for the year ended 31 December 2011.

Completion of one of the last two exploration assets occurred on 16 February 2012 for proceeds of US$2.0 million, resulting in a loss of US$0.1 million.  There are no remaining assets or liabilities recognised in the Group statement of financial position in respect of the last remaining South East Asian exploration company, which the Company no longer expects to sell.

 

3.   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 the prior year, this segmental information was presented for the UK and West Africa as continuing operations, and Malaysia and Indonesia as discontinued operations.  The disposal of Avocet's assets in South East Asia enabled the strategic refocus of the Group, with the Inata operating mine and exploration projects in West Africa being the core focus.  To reflect this change, management has reassessed the segments which should be reported under IFRS 8.  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). Exploration projects are aggregated into the single reportable segment because the projects are managed by a single operating division and reported to the CODM on this basis.  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 2).  Comparative periods have been represented on this basis to allow for a consistent comparison.

 

 

3.   Segmental Reporting








For the three months ended

30 September 2012

UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

INCOME STATEMENT








Revenue


-

50,146

-

50,146

-

50,146

Cost of Sales


718

(45,308)

(1,099)

(45,689)

-

(45,689)

Cash production costs:








- mining


-

(12,355)

-

(12,355)

-

(12,355)

- processing


-

(9,219)

-

(9,219)

-

(9,219)

- overheads


-

(5,521)

-

(5,521)

-

(5,521)

- royalties


-

(3,877)

-

(3,877)

-

(3,877)



-

(30,972)

-

(30,972)

-

(30,972)

Changes in inventory


-

(5,662)

-

(5,662)

-

(5,662)

Expensed exploration and other cost of sales

(a)

751

(2,736)

(1,099)

(3,084)

-

(3,084)

Depreciation and amortisation

(b)

(33)

(5,938)

-

(5,971)

-

(5,971)

Gross profit/(loss)


718

4,838

(1,099)

4,457

-

4,457

Administrative expenses and share based payments


(4,147)

-

-

(4,147)

-

(4,147)

(Loss)/profit from operations


(3,429)

4,838

(1,099)

310

-

310

Net finance items


4

(641)

4

(633)

-

(633)

(Loss)/profit before taxation


(3,425)

4,197

(1,095)

(323)

-

(323)

Taxation


-

(486)

-

(486)

-

(486)

(Loss)/profit for the period


(3,425)

3,711

(1,095)

(809)

-

(809)

Attributable to:








Equity shareholders of parent company


(3,425)

3,602

(1,095)

(918)

-

(918)

Non-controlling interest


-

109

-

109

-

109

(Loss)/profit for the period


(3,425)

3,711

(1,095)

(809)

-

(809)

EBITDA

(c)

(3,396)

10,776

(1,099)

6,281

-

6,281

 

 

(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.

 

 

 

3.   Segmental Reporting (continued)









At 30 September 2012


UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

STATEMENT OF FINANCIAL POSITION








Non-current assets


1,616

271,548

49,399

322,563

-

322,563

Inventories


-

52,426

394

52,820

-

52,820

Trade and other receivables


528

22,481

4,149

27,158

-

27,158

Cash and cash equivalents


13,587

48,140

316

62,043

-

62,043

Total assets


15,731

394,595

54,258

464,584

-

464,584

Current liabilities


(3,085)

(35,070)

(3,094)

(41,249)

-

(41,249)

Non-current liabilities


(430)

(29,746)

-

(30,176)

-

(30,176)

Total liabilities


(3,515)

(64,816)

(3,094)

(71,425)

-

(71,425)

Net assets


12,216

329,779

51,164

393,159

-

393,159









For the three months ended 30 September 2012


UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total))



US$000

US$000

US$000

US$000

US$000

US$000

CASH FLOW STATEMENT








(Loss)/profit for the period


(3,425)

3,711

(1,095)

(809)

-

(809)

Adjustments for non-cash and non-operating items

(d)

546

8,414

(190)

8,770

-

8,770

Movements in working capital


(677)

(2,608)

(3,026)

(6,311)

-

(6,311)

Net cash (used in)/ generated by operations


(3,556)

9,517

(4,311)

1,650

-

1,650

Net interest paid


(4)

(235)

-

(239)

-

(239)

Purchase of property, plant and equipment


(5)

(8,784)

(87)

(8,876)

-

(8,876)

Loans repaid


-

(6,000)

-

(6,000)

-

(6,000)

Deferred exploration expenditure


-

-

(4,871)

(4,871)

-

(4,871)

Other cash movements

(e)

(25,867)

17,058

8,808

(1)

-

(1)

Total (decrease)/ increase in cash and cash equivalents


(29,432)

11,556

(461)

(18,337)

-

(18,337)

 

(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.

 

 

3.   Segmental Reporting (continued)

 








For the three months ended 30 September 2011

UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

INCOME STATEMENT








Revenue


-

42,413

-

42,413

-

42,413

Cost of Sales


572

(32,093)

(1,046)

(32,567)

(939)

(33,506)

Cash production costs:








- mining


-

(8,476)

-

(8,476)

-

(8,476)

- processing


-

(10,017)

-

(10,017)

-

(10,017)

- overheads


-

(6,063)

-

(6,063)

-

(6,063)

- royalties


-

(3,040)

-

(3,040)

-

(3,040)



-

(27,596)

-

(27,596)

-

(27,596)

Changes in inventory


-

4,902

-

4,902

-

4,902

Expensed exploration and other cost of sales

(a)

605

(1,644)

(1,046)

(2,085)

(939)

(3,024)

Depreciation and amortisation

(b)

(33)

(7,755)

-

(7,788)

-

(7,788)

Gross profit/(loss)


572

10,320

(1,046)

9,846

(939)

8,907

Administrative expenses and share based payments


(2,682)

-

-

(2,682)

-

(2,682)

(Loss)/profit from operations


(2,110)

10,320

(1,046)

7,164

(939)

6,225

Profit on disposal of subsidiaries and investments


-

-

-

-

15,422

15,422

Restructure of hedge


-

(39,757)

-

(39,757)

-

(39,757)

Net finance items


37

(984)

-

(947)

(7)

(954)

(Loss)/profit before taxation


(2,073)

(30,421)

(1,046)

(33,540)

14,476

(19,064)

Analysed as:








(Loss)/profit before tax & exceptional items


(2,073)

9,336

(1,046)

6,217

(946)

5,271

Exceptional items



(39,757)

-

(39,757)

15,422

(24,335)

(Loss)/profit before taxation


(2,073)

(30,421)

(1,046)

(33,540)

14,476

(19,064)

Taxation


-

7,323

-

7,323

-

7,323

(Loss)/profit for the period


(2,073)

(23,098)

(1,046)

(26,217)

14,476

(11,741)

Attributable to:








Equity shareholders of parent company


(2,073)

(20,516)

(1,046)

(23,635)

14,518

(9,117)

Non-controlling interest


-

(2,582)

-

(2,582)

(42)

(2,624)

(Loss)/profit for the period


(2,073)

(23,098)

(1,046)

(26,217)

14,476

(11,741)

EBITDA

(c)

(2,077)

18,075

(1,046)

14,952

(939)

14,013

 

(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.

 

 

3.   Segmental Reporting (continued)

 









At 30 September 2011


UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

STATEMENT OF FINANCIAL POSITION








Non-current assets


3,926

265,527

19,188

288,641

-

288,641

Inventories


-

40,650

-

40,650

-

40,650

Trade and other receivables


3,101

15,357

4,231

22,689

-

22,689

Assets held for cash


-

-

-

-

1,935

1,935

Cash and cash equivalents


100,490

19,539

344

120,373

-

120,373

Total assets


107,517

341,073

23,763

472,353

1,935

474,288

Current liabilities


(15,650)

(52,724)

(1,393)

(69,767)

-

(69,767)

Non-current liabilities


(430)

(20,314)

-

(20,744)

-

(20,744)

Total liabilities


(16,080)

(73,038)

(1,393)

(90,511)

-

(90,511)

Net assets


91,437

268,035

22,370

381,842

1,935

383,777









For the three months ended 30 September 2011


UK

West Africa mining

 operations

West Africa exploration

Continuing operations total

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

CASH FLOW STATEMENT








(Loss)/profit for the period


(2,073)

(23,098)

(1,046)

(26,217)

14,476

(11,741)

Adjustments for non-cash and non-operating items

(d)

379

41,423

103

41,905

(15,423)

26,482

Movements in working capital


(508)

(9,181)

(2,811)

(12,500)

(479)

(12,979)

Net cash (used in)/ generated by operations


(2,202)

9,144

(3,754)

3,188

(1,426)

1,762

Net interest (paid)/received


20

(550)

-

(530)

-

(530)

Purchase of property, plant and equipment


-

(18,586)

-

(18,586)

3

(18,583)

Restructure of hedge


(39,757)

-

-

(39,757)

-

(39,757)

Loans repaid


-

(6,000)

-

(6,000)

-

(6,000)

Deferred exploration expenditure


-

(809)

(1,987)

(2,796)

-

(2,796)

Dividend


(6,505)

-

-

(6,505)

-

(6,505)

Net proceeds from disposal of discontinued operations


18,856

-

-

18,856

-

18,856

Other cash movements

(e)

(27,511)

16,700

5,453

(5,358)

(9)

(5,367)

Reclassification of cash not held for sale

(f)

(1,432)

-

-

(1,432)

1,432

-

Total (decrease)/increase in cash and cash equivalents


(58,531)

(101)

(288)

(58,920)

-

(58,920)

 

(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 cash flows in respect of the sale of subsidiaries, 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 remaining Malaysian and Indonesian subsidiaries at 30 June has been excluded from held for sales assets, and reported as Group cash in the consolidated statement of financial position.

 

  

3.   Segmental Reporting (continued)








For the nine months ended 30 September 2012

UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

INCOME STATEMENT








Revenue


-

159,657

-

159,657

-

159,657

Cost of Sales


2,576

(122,823)

(4,183)

(124,430)

-

(124,430)

Cash production costs:








- mining


-

(38,287)

-

(38,287)

-

(38,287)

- processing


-

(30,960)

-

(30,960)

-

(30,960)

- overheads


-

(14,995)

-

(14,995)

-

(14,995)

- royalties


-

(12,398)

-

(12,398)

-

(12,398)



-

(96,640)

-

(96,640)

-

(96,640)

Changes in inventory


-

(596)

-

(596)

-

(596)

Expensed exploration and other cost of sales

(a)

2,675

(7,355)

(4,183)

(8,863)

-

(8,863)

Depreciation and amortisation

(b)

(99)

(18,232)

-

(18,331)

-

(18,331)

Gross profit/(loss)


2,576

36,834

(4,183)

35,227

-

35,227

Administrative expenses and share based payments


(10,497)

-

(10,497)

(10,497)

(Loss)/profit from operations


(7,921)

36,834

(4,183)

24,730

-

24,730

Loss on disposal of subsidiaries


-

-

-

-

(105)

(105)

Net finance items


433

(2,208)

19

(1,756)

-

(1,756)

(Loss)/profit before taxation


(7,488)

34,626

(4,164)

22,974

(105)

22,869

Taxation


-

(7,959)

-

(7,959)

-

(7,959)

(Loss)/profit for the period


(7,488)

26,667

(4,164)

15,015

(105)

14,910

Attributable to:








Equity shareholders of parent company


(7,488)

24,942

(4,164)

13,290

(105)

13,185

Non-controlling interest


-

1,725

-

1,725

-

1,725

(Loss)/profit for the period


(7,488)

26,667

(4,164)

15,015

(105)

14,910

EBITDA

(c)

(7,822)

55,066

(4,183)

43,061

-

43,061

 

 

 

(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 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.

 

 

3.   Segmental Reporting (continued)

 








For the nine months ended 30 September 2011

UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

INCOME STATEMENT








Revenue


-

142,929

-

142,929

67,236

210,165

Cost of Sales


997

(105,679)

(1,373)

(106,055)

(51,101)

(157,156)

Cash production costs:








- mining


-

(22,874)

-

(22,874)

(27,336)

(50,210)

- processing


-

(29,246)

-

(29,246)

(12,046)

(41,292)

- overheads


-

(17,558)

-

(17,558)

(4,842)

(22,400)

- royalties


-

(10,198)

-

(10,198)

(2,552)

(12,750)



-

(79,876)

-

(79,876)

(46,776)

(126,652)

Changes in inventory


-

6,926

-

6,926

(44)

6,882

Expensed exploration and other cost of sales

(a)

1,098

(4,595)

(1,373)

(4,870)

(4,281)

(9,151)

Depreciation and amortisation

(b)

(101)

(28,134)

-

(28,235)

-

(28,235)

Gross profit/(loss)


997

37,250

(1,373)

36,874

16,135

53,009

Administrative expenses and share based payments


(8,154)

-

-

(8,154)

-

(8,154)

(Loss)/profit from operations


(7,157)

37,250

(1,373)

28,720

16,135

44,855

Profit on sale of subsidiaries and investments


-

-

8,990

8,990

88,229

97,219

Restructure of hedge


-

(39,757)

-

(39,757)

-

(39,757)

Net finance items


(655)

(3,229)

(177)

(4,061)

(26)

(4,087)

(Loss)/profit before taxation


(7,812)

(5,736)

7,440

(6,108)

104,338

98,230

Analysed as:








(Loss)/profit before tax & exceptional items


(7,812)

34,021

(1,550)

24,659

16,109

40,768

Exceptional items


-

(39,757)

8,990

(30,767)

88,229

57,462

(Loss)/profit before taxation


(7,812)

(5,736)

7,440

(6,108)

104,338

98,230

Taxation


(865)

3,586

-

2,721

(2,723)

(2)

(Loss)/profit for the period


(8,677)

(2,150)

7,440

(3,387)

101,615

98,228

Attributable to:








Equity shareholders of parent company


(8,677)

(923)

7,440

(2,160)

99,448

97,288

Non-controlling interest


-

(1,227)

-

(1,227)

2,167

940

(Loss)/profit for the period


(8,677)

(2,150)

7,440

(3,387)

101,615

98,228

EBITDA

(c)

(7,056)

65,384

(1,373)

56,955

16,135

73,090

 

(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.

 

 

3.   Segmental Reporting (continued)

For the nine months ended 30 September 2012


UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total



US$000

US$000

US$000

US$000

US$000

US$000

CASH FLOW STATEMENT








(Loss)/profit for the period


(7,488)

26,667

(4,164)

15,015

(105)

14,910

Adjustments for non-cash and non-operating items

(d)

1,213

30,606

(236)

31,583

105

31,688

Movements in working capital


(4,772)

(4,796)

(222)

(9,790)

-

(9,790)

Net cash (used in)/ generated by operations


(11,047)

52,477

(4,622)

36,808

-

36,808

Net interest received/(paid)


134

(962)

-

(828)

-

(828)

Purchase of property, plant and equipment


(169)

(20,557)

(1,866)

(22,592)

-

(22,592)

Deferred exploration expenditure


-

(367)

(26,540)

(26,907)

-

(26,907)

Net proceeds from disposal of discontinuing operations


1,980

-

-

1,980

-

1,980

Loans repaid


-

(18,000)

-

(18,000)

-

(18,000)

Final dividend


(13,166)

-

-

(13,166)

-

(13,166)

Other cash movements

(e)

(39,899)

6,834

32,577

(488)

-

(488)

Total (decrease)/increase in cash and cash equivalents


(62,167)

19,425

(451)

(43,193)

-

(43,193)

 

For the nine months ended 30 September 2011


UK

West Africa mining operations

West Africa exploration

Continuing operations total

Discontinued operations

Total))



US$000

US$000

US$000

US$000

US$000

US$000

CASH FLOW STATEMENT








(Loss)/profit for the period


(8,677)

(2,150)

7,440

(3,387)

101,615

98,228

Adjustments for non-cash and non-operating items

(d)

617

69,876

(8,860)

61,633

(85,107)

(23,474)

Movements in working capital


(3,423)

(17,481)

(2,991)

(23,895)

(1,660)

(25,555)

Net cash (used in)/ generated by operations


(11,483)

50,245

(4,411)

34,351

14,848

49,199

Net interest (paid)/received


(590)

(1,884)

-

(2,474)

17

(2,457)

Net tax paid


(865)

-

-

(865)

(3,679)

(4,544)

Purchase of property, plant and equipment


(9)

(40,573)

-

(40,582)

(881)

(41,463)

Restructure of hedge


(39,757)

-

-

(39,757)

-

(39,757)

Loans repaid


(25,000)

(18,000)

-

(43,000)

-

(43,000)

Deferred exploration expenditure


-

(11,513)

(10,514)

(22,027)

(2,995)

(25,022)

Dividend


(6,505)

-

-

(6,505)

-

(6,505)

Net proceeds from disposal of discontinuing operations


177,007

-

-

177,007

-

177,007

Net cash received from disposal of other investments


-

-

16,501

16,501

-

16,501

Non-controlling interest share of dividend from subsidiary


-

-

-

-

(2,000)

(2,000)

Other cash movements

(e)

(26,192)

23,864

(2,812)

(5,140)

(1,969)

(7,109)

Reclassification of cash not held for sale

(f)

3,341

-

-

3,341

(3,341)

-

Total increase/(decrease) in cash and cash equivalents


69,947

2,139

(1,236)

70,850

-

70,850

 

(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 was for a debt-free cash-free consideration. Therefore, cash held in remaining Malaysian and Indonesian subsidiaries at 30 June 2011 has been excluded from held for sales assets, and reported as Group cash in the consolidated statement of financial position.

 

 

4.   Earnings per Share

 

Earnings per share are analysed in the table below, presenting earnings per share for continuing and discontinued operations.

 


30 September 2012                 (three months)

Unaudited

30 September 2011                  (three months)

Unaudited

30 September 2012                 (nine months)

Unaudited

30 September 2011                  (nine months)

Unaudited


Shares

Shares

Shares

Shares

Weighted average number of shares in issue for the period





- number of shares with voting rights

199,104,701

199,077,172

199,004,219

198,955,805

- effect of share options in issue

6,915

3,419,163

1,212,506

3,720,090

- total used in calculation of diluted earnings per share

199,111,616

202,496,335

200,216,725

202,675,895







US$000

US$000

US$000

US$000

Earnings per share from continuing operations





(Loss)/profit for the period from continuing operations

(809)

(26,217)

15,015

(3,387)

Less non-controlling interest

(109)

2,582

(1,725)

1,227

(Loss)/profit for the period attributable to equity shareholders of the parent

(918)

(23,635)

13,290

(2,160)

(Loss)/earnings per share





- basic (cents per share)

(0.46)

(11.87)

6.68

(1.09)

- diluted (cents per share)

(0.46)

(11.87)

6.64

(1.09)

 

Earnings per share from discontinued operations





Profit/(loss) for the period

-

14,476

(105)

101,615

Less non-controlling interest

-

42

-

(2,167)

Profit/(loss) for the period attributable to equity shareholders of the parent

-

14,518

(105)

99,448

Earnings/(loss) per share





- basic (cents per share)

-

7.29

(0.05)

49.98

- diluted (cents per share)

-

7.17

(0.05)

49.07

 

 

Total (loss)/earnings per share





- basic (cents per share)

(0.46)

(4.58)

6.63

48.90

- diluted (cents per share)

(0.46)

(4.58)

6.59

48.00

 

 

5.   Intangible assets

 

Intangible assets represent deferred exploration expenditure. The movement in the period is analysed below:

 



30 September 

2012

(9 months)

31 December

2011

(12 months)

30 September

2011

(9 months)



US$000

US$000

US$000

At 1 January


42,390

11,091

11,091

Additions


27,383

31,874

22,027

Capitalised depreciation1


543

-

-

Transferred to property, plant and equipment2


(19,661)

-

-

Transferred to disposal group


-

(575)

(575)

At 30 September


50,655

42,390

32,543

 

 

 


 

30 September

2012

 

31 December

2011

30 September

2011



US$000

US$000

US$000

Burkina Faso


28,449

28,525

22,693

Guinea


21,900

13,655

9,697

Mali


306

210

153

Total


50,655

42,390

32,543

 

 

6.   Property,  plant and equipment

 


Mining property and plant

Exploration property

and plant

Office equipment


Nine months ended

30 September 2012

West Africa

West Africa

UK

Total


US$000

US$000

US$000

Cost





At 1 January 2012

316,028

2,812

952

319,792

Additions

20,557

1,389

169

22,115

Transfer from intangible exploration assets2

18,725

936

-

19,661

At 30 September 2012

355,310

5,137

1,121

361,568

Depreciation





At 1 January 2012

71,380

-

458

71,838

Charge for the period

18,232

-

99

18,331

Charge for the period  - capitalised1

-

543

-

543

At 30 September2012

89,612

543

557

90,712

Net Book Value




At 30 September 2012

265,698

4,594

564

270,856

At 1 January 2012

244,648

2,812

494

247,954

 

1 Capitalised depreciation represents the depreciation of items of property, plant, and equipment which are used exclusively in the Group's exploration activities.  The consumption of these assets is capitalised as an intangible asset, in accordance with accounting standards and industry practice.

2Transfers from exploration costs of US$18.7 million represent the cost of increasing the Inata reserve from the level acquired in 2009 when Avocet acquired Wega Mining. These ounces now form part of the life of mine plan and the cost will be depreciated in accordance with the Group accounting policy. In addition to this, US$0.9 million of property, plant and equipment that is used in the Group's exploration division has been transferred from intangible to tangible assets.

 

 

7.   Other financial assets



30 September 2012

(3 months)

Unaudited

30 September 2011

(3 months)

Unaudited

30 September 2012

(9 months)

Unaudited

30 September 2011

(9 months)

Unaudited



US$000

US$000

US$000

US$000

At 1 January/1 July


1,224

-

1,828

20,293

Additions


-

2,313

-

2,313

Disposals


-

-

-

(17,390)

Fair value adjustment


(172)

-

(776)

(2,903)

At 30 September


1,052

2,313

1,052

2,313

 

Other financial assets represent available for sale financial assets which are measured at fair value. The fair value adjustment is the periodic re-measurement to fair value, with gains or losses on re-measurement recognised in equity.

Other financial assets relate to shares in Golden Peaks Resources Limited. The shares were acquired as consideration for the disposal of two of the Group's assets in South East Asia in 2011 (note 2). In January 2012 Golden Peaks announced that it had changed its name to Reliance Resources.  Reliance Resources is listed on the Toronto Stock Exchange.

In 2011 Avocet sold its entire holding of shares in Avion Gold Corp (Avion) for cash consideration of US$16.5 million. The Avion shares were acquired as consideration for the disposal of the Houndé group of licences in 2010. On the disposal of the shares, accumulated gains previously recognised in equity were transferred to the income statement and recognised in the profit on disposal of US$8.9 million.

 

8.   Inventories



30 September 2012

Unaudited

31 December

 2011

Audited

30 September 2011

Unaudited



US$000

US$000

US$000

Spare parts and consumables


40,513

27,612

24,919

Work in progress


10,343

12,707

13,786

Finished goods


1,964

196

1,945



52,820

40,515

40,650

 

Work in progress includes ore in stockpiles and gold in circuit. Finished goods represents gold in transit or undergoing refinement, prior to sale.

 

 

9.   Trade and other receivables



30 September 2012

Unaudited

31 December

 2011

Audited

30 September 2011

Unaudited



US$000

US$000

US$000

Advances to suppliers


8,213

11,151

14,703

VAT


18,037

15,579

7,444

Prepaid expenses


908

1,799

542



27,158

28,529

22,689

 

 

 

10.      Cash and cash equivalents

 

Included in US$62.0 million cash and cash equivalents at 30 September 2012 is US$38.3 million of restricted cash (31 December 2011: US$14.6 million), representing a minimum account balance

held in Macquarie Bank Limited, a condition of the Inata project finance facility, and US$1.3 million (31 December 2011: US$0.6 million) relating to amounts held on restricted deposit in Burkina Faso for the purposes of environmental rehabilitation work, as required by the terms of the Inata mining licence.

 

 

11.      Other financial liabilities

Other financial liabilities include the remaining balance under the Inata project finance facility of US$11 million.  The facility is due for repayment at US$6 million per quarter, with the final remaining balance of US$5 million due on 31 March 2013.  Also included within other financial liabilities are liabilities in respect of assets held under finance lease, US$0.7 million of which is included within current financial liabilities, and US$2.5 million is included within non-current financial liabilities.       

 

 

 

12.      Non-operating items in the income statement 

 

In arriving at net cash flow from operating activities, the following non-operating items in the income statement have been adjusted for:

 

 



30 September 2012

(three months)

Unaudited

30 September 2011

(three months)

Unaudited

30 September 2012

(nine months)

Unaudited

30 September 2011

(nine months)

Unaudited



US$000

US$000)

US$000

US$000

Exchange losses - continuing operations


1,087

326

1,550

296

Exchange gains - discontinued operations


-

(8)

-

(201)

Finance expense - continuing operations


720

991

2,321

4,023

Finance income - continuing operations


(11)

(20)

(125)

(20)

Net finance items - discontinued operations


-

7

-

26

Profit on disposal of other financial assets


-

-

-

(8,990)

Profit on disposal of subsidiaries


-

(12,995)

-

(85,802)

Restructure of hedge


-

39,757

-

39,757

(Profit)/loss on disposal of investments


-

(2,427)

105

(2,427)

Non-operating items in the income statement


1,796

25,631

3,851

(53,338)

 

 

13.      Exceptional items

 


30 September 2012

(3 months)

Unaudited

30 September 2011

(3 months)

Unaudited

30 September 2012

(9 months)

Unaudited

30 September 2011

(9 months)

Unaudited


US$000

US$000)

US$000

US$000

Profit /(loss) on disposal of subsidiaries

-

12,995

(105)

85,802

Restructure of hedge

-

(39,757)

-

(39,757)

Profit on disposal of investments

-

2,427

-

2,427

Profit on disposal of other financial assets

-

-

-

8,990

Exceptional (loss)/gain

-

(24,335)

(105)

57,462

 

Profit on Disposal of Subsidiaries

 

Profit on disposal of subsidiaries relates to the profit on disposal of Avocet's South East Asian assets. Further details of this transaction are included in note 2.

 

Restructure of Hedge

 

On 27 July 2011, Avocet announced the restructure of forward contracts for delivery of gold bullion ("the hedge"). The restructure consisted of eliminating 58,432 ounces under the forward contracts at a cost of US$39.8 million and extending the delivery profile of the remaining ounces by four years to June 2018.  The forward contracts are considered to be outside of the scope of IAS 39, on the basis that they are for own use and gold produced will continue to be physically delivered to meet the contractual requirement in future periods, and therefore no value is reflected in the consolidated financial statements for the remaining contracts, as allowed by the exemption conferred by IAS 39.5. The restructuring of the contracts, as a response to the significant change in the Group's production profile following the disposal of the Penjom Mine and North Lanut, has not changed the nature or purpose of the contracts, which continue to be held for own use, nor does it represent a practice of net settlement. Further details of this transaction were provided in note 25 of the Annual Report for the year ended 31 December 2011.

 

Profit/ (loss) on Disposal of Investments

 

Avocet completed the sale of PT Arafura Mandiri Semangat (PT Arafura) and PT Aura Celebes Mandiri (PT ACM) to Reliance Resources Limited, a company owned by Golden Peaks Resources Limited (Golden Peaks).  Consideration was in the form of 7.9 million shares in Golden Peaks, a company listed on the Toronto Stock Exchange.  PT Arafura and PT ACM held non-core exploration projects in Indonesia, and were included in the balances of the disposal group held for sale at 31 December 2010. 

 

Profit on disposal of other financial assets

 

During 2011, Avocet disposed its entire holding of shares in Avion Gold Corp ("Avion") for cash consideration of US$16.5 million. The Avion shares were acquired as consideration for the disposal of the Houndé group of licences in 2010. The shares were recorded in the balance sheet at fair value, with movements in fair value recognised in equity, in accordance with IAS39. On the disposal of the shares, accumulated gains previously recognised in equity were transferred to the income statement and recognised in the profit on disposal.

 

14.      Related party transactions

 

The table below sets out charges in the nine month period and balances at 30 September 2012 between the Company (Avocet Mining PLC) and Group companies that were not wholly owned, in respect of management fees and interest on loans. There were no other related party transactions in the period requiring disclosure.

 


Avocet Mining PLC

Wega Mining AS


Charged in nine months 

Balance at

30 September 2012

Charged in nine months 

Balance at

30 September 2012


US$000

US$000

US$000

US$000

Société des Mines de Bélahouro SA (90%)

5,497

139,601

5,481

107,461

 

Compensation paid to key management of the Group during the quarter was US$0.8 million, including pension contributions of US$0.03 million.  A share based payment expense of US$0.2 million was recognised in the quarter in respect of awards made under the Performance Share Plan, the details of which were reported in the announcement made on 13 March 2012. No dividends were received by Directors during the period in respect of shares held in the Company.  There were no dividends received by Directors during the quarter in respect of shares held in the Company.  In the nine months ended 30 September 2012, Directors received US$0.07 million in dividends in respect of shares held in the Company.

 

15.      Contingent liabilities

 

There were no contingent liabilities at 30 September 2012 or 30 September 2011.

 

In respect of the PT Lebong Tandai ("PT LT") litigation, the Company can confirm that the second Indonesian civil case brought by PT LT against Avocet and other parties in April 2012, was dismissed by the South Jakarta District Court on 19 September 2012. The Court's reason for dismissing the case was based on the acknowledgement that the South Jakarta District Court does not have the jurisdiction to hear the matter. As it did after the first Indonesian civil case was dismissed in December 2011, PT LT has appealed the District Court's decision on the second case. The Company has no knowledge of when either appeal may be heard by the High Court of Indonesia.

 

Note 31 to the financial statements for the year ended 31 December 2011 contains a description of the background to this action, and the reader is therefore referred to the Company's Annual Report for 2011 for further details.

 

 

16. Unaudited quarterly income statement for continuing operations








Quarter ended

31 March 2012

(Unaudited)

Quarter ended

30 June 2012

(Unaudited)

Quarter ended

30 September 2012

(Unaudited)

Year to date 2012

(Unaudited)

Year ended

31 December

2011

(Audited)


US$000

US$000

US$000

US$000

US$000







Revenue

60,256

49,255

50,146

159,657

213,375

Cost of sales

(36,007)

(42,734)

(45,689)

(124,430)

(156,652)

Cash production costs:






- mining

(12,707)

(13,225)

(12,355)

(38,287)

(36,137)

- processing

(10,827)

(10,914)

(9,219)

(30,960)

(40,644)

- overheads

(4,685)

(4,789)

(5,521)

(14,995)

(23,232)

- royalties

(4,339)

(4,182)

(3,877)

(12,398)

(15,515)


(32,558)

(33,110)

(30,972)

(96,640)

(115,528)

Changes in inventory

5,163

(97)

(5,662)

(596)

4,098

Expensed exploration and other cost of sales

(2,047)

(3,732)

(3,084)

(8,863)

(6,202)

Depreciation and amortisation

(6,565)

(5,795)

(5,971)

(18,331)

(39,020)

Gross profit

24,249

6,521

4,457

35,227

56,723

Administrative expenses

(2,154)

(3,166)

(3,630)

(8,950)

(9,657)

Exceptional administrative expenses

-

-

-

-

(3,078)

Share based payments

(559)

(471)

(517)

(1,547)

(1,941)

Profit from operations

21,536

2,884

310

24,730

42,047

Restructure of hedge

-

-

-

-

(39,757)

Profit on disposal of investments

-

-

-

-

8,990

Finance items






Exchange gains/(losses)

145

219

76

440

(116)

Finance expense

(858)

(743)

(720)

(2,321)

(4,812)

Finance income

16

98

11

125

125

Profit before taxation

20,839

2,458

(323)

22,974

6,477

Analysed as:






Profit before taxation and exceptional items

20,839

2,458

(323)

22,974

40,322

Exceptional items

-

-

-

-

(33,845)

Profit before taxation

20,839

2,458

(323)

22,974

6,477

Taxation

(6,884)

(589)

(486)

(7,959)

(7,297)

Profit/(loss) for the period

13,955

1,869

(809)

15,015

(820)







Attributable to:

Equity shareholders of the parent company

12,597

1,611

(918)

13,290

(355)

Non-controlling interest

1,358

258

109

1,725

(465)


13,955

1,869

(809)

15,015

(820)







EBITDA 1

28,101

8,679

6,281

43,061

84,145

 

 

1EBITDA 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.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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