24 October 2016
Seizure of gold at Inata mine
Avocet Mining PLC ("Avocet" or "the Company") announces that bailiffs acting on behalf of ex- workers of Société des Mines de Bélahouro SA ("SMB", owner of the Inata gold mine), who had been laid off following the illegal strike in December 2014, took seizure of a gold shipment containing approximately 1,400 ounces on Friday 7 October 2016.
The legal basis for the seizure was, according to representatives of the ex-workers, a number of unpaid benefits which remain outstanding. Although a court upheld their claim that elements of pay were due, the amount has yet to be determined by a court, and SMB management believe that any amount would be considerably less than the 2bn CFA (US$3.4m) claimed by representatives of these workers.
SMB has maintained that the seizure itself was illegal, and although management had hoped to have the seizure removed earlier, a court hearing is now due to take place today at which the lifting of the seizure will be requested. No gold shipments will be made until SMB is sure that they will not be again intercepted by bailiffs. Following this hearing, a decision is expected within 1-2 weeks.
SMB management have advised workers and the government that if this matter cannot be resolved promptly, and cash cannot be realised from gold sales in order to pay for running costs of the mine, management will need to consider temporary cessation of operations.
If such a cessation is necessary, production will be impacted and no payments will be possible to suppliers or workers until the matter is resolved. If the cessation continues for a prolonged period, it may mean that the mine cannot be re-started without significant investment, if at all, and may have a material adverse effect on SMB's financial position.
If SMB is unable to provide funds for head office and corporate costs before receipt of proceeds in connection with the sale of Tri-K to Managem SA (as announced on 10 October 2016), which is expected to take place before the end of the year, then the Company will need to find alternative sources of funds, which are expected to be approximately US$1-200k per month.
Further updates will be made as appropriate in this matter.
FOR FURTHER INFORMATION PLEASE CONTACT
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Avocet Mining PLC
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Bell Pottinger
Financial PR Consultants
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J.P. Morgan Cazenove Corporate Broker
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David Cather, CEO Jim Wynn, FD
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Daniel Thöle
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Michael Wentworth-Stanley
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+44 20 3709 2570
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+44 20 3772 2555
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+44 20 7742 4000
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Avocet Mining PLC ("Avocet" or the "Company") is an unhedged 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 Inata Gold Mine poured its first gold in December 2009 and produced 74,755 ounces of gold in 2015. Other assets in Burkina Faso include five exploration permits surrounding the Inata Gold Mine in the broader Bélahouro region. The most advanced of these projects is Souma, some 20 kilometers from the Inata Gold Mine.
The Company also holds an interest in the Tri-K project in Guinea. On 10 October 2016, the Company announced that it had agreed to dispose of 40% of the project to Managem, a Moroccan group listed on the Casablanca stock exchange, subject to, inter alia, shareholder approval, and which will increase upon completion of a bankable feasibility study for a CIL plant at the site, the incurring of expenditures of at least US$10 million, and the enlarging of the ore reserve, to 70% (in the event of an increase of the reserve to 1 million ounce or more) or 60% (if less than 1 million ounces).