5th Aug 2014 09:16
LONDON (Alliance News) - Avocet Mining PLC Tuesday said its pretax loss narrowed in the first half of 2014 as a sharp drop in revenue was offset by reduced impairment charges and comparable losses to its financial instruments during the previous year.
The West African gold mining and exploration company posted a pretax loss of USD46.0 million for the six months ended June 30 from a pretax loss of USD80.5 million the previous year.
The company said revenue fell 26% during the period to USD59.4 million from USD80.5 million as its second-quarter gold production figures were 6% below what was achieved in its first quarter at 21,650 ounces due to the processing of lower-grade oxide ore ahead of the commissioning of a new carbon blinding circuit, which is a method of extracting gold from ore.
Avocet said its half-year gold production was down 28% compared to the previous year at 44,798 ounces.
The company said the lower second-quarter production means that its full-year guidance is now roughly 105,000 ounces, rather than between 105,000 ounces and 115,000 ounces.
However, Avocet said the impairment charges for its mining and exploration assets fell to USD25.8 million from USD73.6 million, and noted that its 2013 interim figures were hit by USD116.9 million in losses to the company's financial instruments.
In June, the company took steps to reduce costs and capital expenditure for its Inata gold mine operation in Burkina Faso. On Tuesday it said the funding requirement for development at the site has now been reduced to USD15 million to USD20 million through a revised mine plan and additional cost reductions.
Avocet said negotiations continue with Ecobank and other parties to satisfy this funding requirement and a number of measures have been agreed to ease short-term liquidity
"The focus at Inata over the second half of 2014 will be on further cost reductions and on successfully commissioning the carbon blinding circuit in September, which will increase monthly gold production. With a lower cost base and higher production expected for the future, we are now looking at the upside potential in and around Inata," Chief Executive David Cather said in a statement.
Avocet shares were down 8.2% to 7.60 pence on Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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