28th Apr 2015 07:25
LONDON (Alliance News) - Avocet Mining PLC Tuesday reported a narrowed pretax loss in 2014 despite a drop in revenue due to lower production, and said that improving recovery rates at the Inata mine or the gold price improving will be "critical" to its performance in 2015.
The West-African focused gold miner reported a USD140.1 million pretax loss for 2014, compared with a USD149.4 million loss in 2013, despite revenue falling to USD110.4 million from USD149.3 million due to lower gold production. Its loss before interest, tax, depreciation and amortisation was USD2.2 million, compared with a USD10.5 million loss in 2013.
"While gold production was adversely affected by lower throughput levels and lower recoveries, the impact of this on gross profit was offset by lower mining costs following a reduction in tonnages in response to smaller pit sizes, a deliberate strategy to minimise the cost of waste stripping in order to maximise cash generation at Inata," it said.
In 2014, Avocet recognised a number of impairments in relation to its mining and exploration assets. The assets of its producing Inata mine in Burkina Faso were impaired by a total of USD105.5 million during the year, as a result of lower gold prices, and changes in production assumptions which had the effect of shortening the mine life and reducing the expectation of cash generation. The Tri-K project in Guinea was also impaired by USD6.1 million.
In 2013, the company booked USD103.4 million in total in exceptional items.
Before exceptional items, the pretax loss for 2014 was USD28.4 million compared with a pretax profit of USD46.0 million in 2013.
Gold production in 2014 totalled 86,037 ounces, down 27% from 2013 as a period of processing low grade oxide ore was followed by lower-than-expected recoveries and a strike which cost four weeks lost production in 2014. Avocet were targeting production of 95,000 ounces in 2014.
However, cost reduction efforts at the Inata mine meant total cash costs fell 28% to USD102.0 million from USD142.5 million in 2013. Cash costs per ounce were slightly lower at USD1,186 compared with USD1,203 in 2013.
Avocet also benefited from slightly better gold prices in 2014, averaging USD1,263 per ounce compared with USD1,261 an ounce in 2013. Prices partially benefited from the company's hedging activity.
"Looking ahead at 2015, it is clear improved recoveries and/or gold prices at Inata are critical. The operation has struggled to maintain production levels and its life of mine is now less than three years. However, our management is determined to overcome the current challenges and circumstances can of course improve," said Chairman Russell Edey.
Avocet shares were down 3.7% at 4.55 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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