2015 third quarter production update

 2015 third quarter production update

Avocet Mining PLC ("Avocet" or "the Company") today announces its production and cash costs for the third quarter of 2015.

· Gold production for Q3 was 17,517 ounces at a cash cost of US$1,107 per ounce, compared with 22,848 ounces produced in Q2 at a cash cost of US$952 per ounce

· Gold production was lower principally as a result of head grades of 1.50 g/t in Q3 compared with 2.27 g/t in Q2

· Full year gold production for 2015 now expected to be 70-75,000 ounces

· Military coup and political instability during September in Burkina Faso led to the suspension of gold shipments for three weeks, resulting in delays to supplier payments. Discussions remain ongoing with key creditors with a view to ensuring the continued provision of critical supplies

· Souma programme of drilling and test work was completed in July, with assessment of results ongoing

· Negotiations to secure funding for the Tri-K project continue. Updates will be made public at the appropriate time.

Q3 production at Inata

In spite of production challenges and cash constraints, safety continues to be a key result area for management. During the quarter, the mine passed the milestone of over 6 million accumulated man hours since the last Lost Time Injury (LTI), and the mine's Lost Time Injury Frequency Rate (LTIFR) remained at zero.

Mining volumes increased to 4.6 million tonnes in the quarter (compared with 4.0 million tonnes in Q2), as mining operations returned to normal staffing levels following the re-manning of crews in the wake of the strike in December 2014.

Mining during H1 2015 had focussed on higher grade, carbonaceous deposits, which yielded lower recoveries but higher overall gold production. In Q3 2015, mining moved to areas of cleaner, lower grade ore, and while recoveries improved from 67% to 72%, average head grades fell from 2.27g/t to 1.50g/t, resulting in an overall drop in production of 23%. This lower production, together with the increased mining rate, led to an increase in cash costs to US$1,107 per ounce (Q2 2015: US$952 per ounce).

Full year production for 2015 is now expected to be lower than previous guidance at 70-75,000 ounces at a cash cost of approximately US$1,100 per ounce.

Cashflow at Inata remains tight. The coup in Burkina Faso in September/October resulted in gold shipments being suspended for three weeks. No supplier payments could be made during this period, which put the relationship with creditors under considerable strain. The situation in the country has largely returned to normal, and efforts are underway to address the financing of the mine to ensure the continued provision of critical supplies.

Souma

The Souma trend field programme has been completed and geological and resource work has focused on modeling major quartz veins and estimating the voids from artisanal gold mining at the Dynamite prospect. Initial indications, based on 31% of metallurgical samples so far analysed from Dynamite and Miilam Central, are that the results are promising and that the current Souma resource will grow once the final assays have been received and new models created.

Tri-K project

During 2015, the Company's focus has been on the optimisation of the design of the Tri-K project in Guinea, and on making it as attractive as possible for financiers. Avocet remains committed to start construction of the project as early as possible in 2016. Once constructed, Tri-K will be the first new gold mine in Guinea for a number of years. Discussions remain ongoing with interested parties, and the Company hopes to be able to provide a more substantial update to the market in due course.

Corporate funding 

As announced in August 2015, the loan facility from an affiliate of Avocet's largest shareholder Elliott Associates was expected to provide sufficient funds to meet the Company's corporate requirements through to the end of October 2015. Through prudent cash management, the Company believes that it will have sufficient funds beyond this point. However, working capital remains limited and the Company believes it will need to raise further funding in the near term. Discussions are ongoing in this regard.

The Company has been advised that the outcome of the arbitration hearing with J&Partners is now expected to be delivered in November. As previously reported, the verdict in this case may have a material impact on the financing of the Group, as a favourable outcome may entitle Avocet to a portion of its US$1.8m cost claim, while an unfavourable outcome may expose the Company to a cost claim from the claimants of up to US$4.2m. The Company is advised that it has a better than evens chance of success in the arbitration.

FOR FURTHER INFORMATION PLEASE CONTACT

NOTES TO EDITORS

Avocet Mining PLC ("Avocet" or the "Company") is an unhedged gold mining and exploration company listed on the London Stock Exchange (ticker: AVM.L) and the Oslo Børs (ticker: AVM.OL). The Company's principal activities are gold mining and exploration in West Africa.

In Burkina Faso the Company owns 90% of the Inata Gold Mine. The Inata Gold Mine poured its first gold in December 2009 and produced 86,037 ounces of gold in 2014. Other assets in Burkina Faso include a number of exploration permits surrounding the Inata Gold Mine in the broader Bélahouro region. The most advanced of these projects is Souma, some 20 kilometres from the Inata Gold Mine.

In Guinea, Avocet owns 100% of the Tri-K Project in the north east of the country. Drilling to date has outlined a Mineral Resource of 3.0 million ounces, and in October 2013 the Company announced a maiden Ore Reserve on the oxide portion of the orebody, which is suitable for heap leaching, of 0.5 million ounces. As an alternative, the potential exists to exploit the entire 3.0 million ounce Tri-K orebody via CIL processing method. The Company announced that an exploitation permit had been awarded for Tri-K on 27 March 2015.

Appendix 1

Inata Gold Mine quarterly production information 2014-15