24th Oct 2016 07:27
LONDON (Alliance News) - Avocet Mining PLC on Monday said gold from the Inata mine in Burkina Faso was seized earlier this month by bailiffs acting on behalf of ex-workers of the mine owner.
Avocet said a gold shipment containing around 1,400 ounces was seized by bailiffs on October 7. The legal basis for the seizure was said to be a claim made by ex-workers of Societe des Mines de Belahouro, the owner of the Inata mine, which Avocet operates.
Though a court upheld the claim of pay due to the former workers, SMB has said the claim would be for substantially less than the USD3.4 million of gold seized.
SMB has maintained the seizure itself was "illegal" and a court hearing is due to take place on Monday. No gold shipments will be made from the site until SMB is confident none of the gold will be seized.
SMB has also said that if the matter is not resolved quickly and cash cannot be generated from gold sales to cover operating costs at the mine, it will have to consider suspending mine operations.
If this cessation of work is necessary, production will take a hit and no payments will be possible for suppliers or workers until the matter is resolved. If the suspension goes on for some time, Avocet said it may not be possible to restart the mine without significant investment.
Avocet said that if SMB cannot provide funds for head office and corporate costs prior to Avocet getting the proceeds from its joint venture to bring Morocco's Managem SA into the Tri-K gold project in Guinea, the firm will have to find alternative sources of funds to cover costs at Inata.
This could be USD100,000 to USD200,000 per month, it said.
Shares in Avocet were down 19% to 67.31 pence early Monday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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