6th Mar 2014 12:37
LONDON (Alliance News) - Avocet Mining PLC Thursday said its pretax loss widened in its full year as revenues and production fell, and the company was hit by a USD96.6 million charge.
The west African gold mining and exploration company said its pretax loss widened to USD149.4 million from USD117.0 million the previous year, as its revenues fell 27% to USD149.3 million from USD204.1 million in 2012.
The company said its revenues fell due to lower production and a 15% fall in its average realised gold price during the period to USD1,261 per ounce from USD1,491 per ounce the previous year.
Avocet was also hit by a USD96.6 million charge on the loss of recognition of forward contracts which it attributed to a mark-to-mark liability for a hedge book which has been in place since before the acquisition of its Inata Gold Mine in Burkina Faso in 2009.
In January, the company announced that its gold production for 2013 was 118,443 ounces at a cash cost of USD1,203 per ounce, compared from 135,189 ounces at a cash cost of USD1,000 per ounce from the Inata mine during 2012.
The company said in December that its fourth-quarter production was hurt by breakdowns in mobile and plant equipment, with mining volumes being affected by mechanical availability of the loading equipment and pit wall failures. Avocet said in January that all of these problems have now been addressed.
Avocet initiated a business review in December to maximise the value of its assets, and the company said it is now investigating a number of operational changes including moving to contract mining.
The company said its life-of-mine plan for Inata at this point indicates healthy cash generation between 2015 and 2018 but the company needs between USD20 million and USD30 million in 2014 to rectify the production issues it encountered in 2013.
Avocet shares were down 16% to 10.45 pence Thursday afternoon.
By Tom McIvor; [email protected]; @TomMcIvor1
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