24th Aug 2015 07:53
LONDON (Alliance News) - Avocet Mining PLC shares plummeted on Monday after the company lowered its full year production guidance and reported a narrower pretax loss in the first half of 2015.
The company, which will now produce up to 11,000 ounces less than originally expected in 2015, is also currently trying to seal a long term financing deal as it is only funded until the end of October.
Avocet shares were down 20% to 3.00 pence per share on Monday morning.
The West African gold producer reported a USD37.6 million pretax loss in the first half of 2015, narrowing from a USD46.0 million loss a year earlier despite revenue falling to USD47.8 million from USD59.4 million.
The pretax loss was narrower because it made a significantly narrower gross loss of only USD6.6 million compared to a USD13.1 million loss as its cost of sales dropped to USD54.4 million from USD72.4 million, meaning its operations are still not profitable.
Production in the half fell to 39,859 ounces of gold from 44,798 ounces, mainly caused by the knock on affects of strike action that happened in December 2014.
As a result of lower-than-expected production, Avocet reduced its full year guidance to 75,000 to 80,000 ounces. Back in May, it said full year production would be "similar" to the 86,000 ounces of gold produced from its flagship Inata mine in 2014.
That was compounded by lower gold prices, which dropped to an average of USD1,203 per ounce compared to USD1,287 per ounce a year earlier, causing a USD11.6 million loss in revenue in the period, it said.
Gold was trading at around USD1,159 per ounce on Monday morning.
Its cash cost improved to USD1,021 per ounce in the half, falling from an average of around USD1,248 per ounce a year earlier.
Capital expenditure in the first half also fell as the company focuses on cash conservation, to USD2.7 million from USD6.9 million a year earlier. It did not book any exploration costs in the period.
"Combined with lower production, the weakening gold price poses an increasing threat to Inata's cash generation and its efforts to reduce the mine's creditor balance and maintain its life of mine. However, management remains focused on these areas," it said in a statement.
Earlier in August, the company drew down further funds under the Third Elliott loan facility agreed with Manchester Securities Corp, an affiliate of its largest shareholder Elliott Management Corp, leaving it with only another USD400,000 to drawdown in the future.
At the time, Avocet said it only had enough funds to keep going until the end of October as it tries to secure a longer term funding deal.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
AVM.L