Final Results

9th Jul 2008 07:00



PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2008

RECORD NET PROFIT UP 84%

PRODUCTION FROM CONTINUING OPERATIONS UP 10% 

CASH COSTS DOWN 10%

Profit before tax and exceptional items up 126% at US$52.4 million

Profit for the period up 84% at US$31.9 million

Earnings per share up 60% to 23.6 cents

Production from continuing operations up 10%, cash costs down 10%

Loss-making ZGC sold for profit of US$12.3 million

Encouraging exploration results at existing mines and greenfield prospects

Well positioned for growth with year end cash of US$122 million and no debt

 

(1) Prepared in accordance with International Financial Reporting Standards (IFRS) following the Group’s adoption

of IFRS with effect from 1 April 2007. Prior periods have been adjusted accordingly.  

 

Commenting on the preliminary results, Jonathan Henry, Chief Executive, stated:

"The initiatives we have undertaken over the last two years are bearing fruit, especially operating improvements aimed at increasing gold production and offsetting the significant cost inflation currently affecting our industry. The disposal of ZGC in July 2007 has allowed us to focus on maximising efficiencies and growing the Company. We have had very encouraging results from exploration drilling both at our existing operations and at the Banda properties acquired last year, giving us a strong pipeline of projects for the future."

For further information please contact:

Avocet Mining PLC	Buchanan Communications	Ambrian Partners Limited	JPMorgan Cazenove
Jonathan Henry, Chief Executive Officer Mike Norris, Finance Director 020 7907 9000 www.avocet.co.uk	Financial PR Consultants  Bobby Morse Robin Haddrill 020 7466 5000 www.buchanan.uk.com	NOMAD and Joint Broker Richard Brown Richard Greenfield 020 7634 4700 www.ambrian.com	Lead Broker Michael Wentworth-Stanley Sam Critchlow 020 7588 2828  www.jpmorgancazenove.com

Notes to Editors

Avocet is a mining company listed on the AIM market of the London Stock Exchange (Ticker: AVM). The Company's principal activities are gold mining and exploration in Malaysia (as 100 per cent owner of the Penjom mine, the country's largest gold producer), and Indonesia (as 80 per cent owner of the North Lanut gold mine and Bakan project in North Sulawesi). The Company has a number of other advanced mining and exploration projects in South East Asia.

Background to operations

The Penjom gold mine is Malaysia's largest gold producer and was developed by Avocet after applying modern technology to grass roots exploration in an area of historic mining. The mine was commissioned in December 1996 with reserves of 223,000 ounces. Successful resource development, particularly over the last five years, means Penjom has produced over one million ounces of gold to date and still has nearly one million ounces of resources. This resource is expected to grow further following a drilling programme expected to total 70,000 metres over the next year which includes deep drilling to help assess the potential for underground mining in the near future, where areas of high grade ore are known to exist. In November 2005, the Company announced a significant increase in Penjom's life of mine plan to over half a million ounces, which resulted in the design of a much larger pit to allow the additional ounces to be mined. Over the last year Penjom has expanded its mining and plant capacity accordingly. Avocet was able to overcome initial problems of highly carbonaceous ore at Penjom by developing unique processing systems including complex gravity circuits and resin-in-leach (RIL) technology. These processes have potential applications at other carbonaceous orebodies.

The North Lanut gold mine in North Sulawesi, Indonesia, was developed by Avocet from the exploration stage and has produced nearly 200,000 ounces since it was commissioned in 2004, including record production in the year ended 31 March 2008 of 74,000 ounces. Recent high grade exploration drilling results indicate the potential for a significant increase in resources and extension in the mine's life. In 2002 Avocet purchased its 80 per cent interest in PT Avocet Bolaang Mongondow (PT ABM), an Indonesian company holding a 6th generation Contract of Work (CoW), from Newmont Mining Corporation. The North Lanut gold mine is located within the CoW, which includes exploration and mining rights over approximately 50,000 hectares in an area highly prospective for gold. An Indonesian company, PT Lebong Tandai, owns the remaining 20 per cent.

A copy of a corporate presentation to be made today at the Company's annual results presentation is available on the Company's website.  Chairman's Statement

I am pleased to report on a year that has seen significant and successful changes for your Company. Following the disposal of the loss making ZGC operation in Tajikistan last year, the board and management have been able to concentrate on growth while also improving operational performance, which has allowed for an increase in production from the Company's two operating assets. Unit costs have been reduced to levels below those of the previous year and lower than the industry average. In Malaysia, the Penjom mine completed the commissioning of a new mining fleet and a higher capacity mill as part of the expansion announced last year to maintain gold production levels despite an anticipated decline in grades. In Indonesia, the North Lanut mine in North Sulawesi achieved record gold production, benefiting from significantly higher than expected grades. Both operations announced upgrades to their resources and reserves during the year and resource development drilling is in progress to extend the lives of both mines. The Company has now assembled a comprehensive pipeline of exploration properties which, together with continued exploration at both mine sites, is forecast to add significant resources over the coming year.

The way forward

The Company has a clear strategy of growth underpinned by operational excellence at its existing mines and future projects in order to maximize their combined value to shareholders. Avocet's goal is to develop from a producer of approximately 160,000 ounces to a mid-tier producer of 300,000 - 500,000 ounces over the next five years, through both internal growth and growth by acquisition. Avocet's central and operational management teams have been enhanced during the last year to ensure the strength in depth required to meet these objectives.

Resource development at Penjom and North Lanut will be an important part of the Company's growth, recognising the significant potential at both operations and the lower risk attached to expanding existing operations. The development of Bakan in Indonesia as the Company's third mine is also an area of focus over the next 2 years. For new projects, priority will be given to those capable of producing over 100,000 ounces per annum and to those with resources of one million or more ounces. Avocet's strong pipeline of exploration properties means that such mines may come from internal development as well as through acquisition. However, the lead time of 2-4 years required before internal developments can be commissioned means that in the short term new mines will need to come through acquisition. As noted at the half year, acquisitions will only be contemplated where there is a clear and compelling case for increased long term shareholder value, and a number of possible targets have been rejected during the year where this case was not apparent. 

Gold market

High gold prices continued throughout the year, driven by US dollar weakness, increasing oil prices and strong speculative inflows especially to the exchange traded gold funds or ETFs. Spot prices peaked at an intraday high of over US$1,030/oz in mid-March 2008 and averaged US$766/oz for the year, 22 per cent above the previous year. Following a restructuring of the Company's gold collar in October 2007, all of Avocet's sales have been at spot prices, 26 per cent higher than in the previous year, and will continue at spot for the next year.

Outlook

Gold prices remain robust and most industry commentators are forecasting further price rises in the short to medium term. The mining industry is experiencing significant cost inflation, driven by higher fuel prices and the indirect impact on delivered prices for most of the raw materials consumed. With higher input costs, maximising gold production and operational efficiencies will be critical to reducing unit costs and increasing profitability. Strong cost control will continue to be a top priority in order to maintain the Company's position as a low cost gold producer. Avocet will continue to invest in equipment and infrastructure at Penjom and North Lanut in order to address the key challenges of grade and recovery respectively. Continued exploration success is likely to add significant value, with our exploration portfolio including a number of projects that have the potential to be future mines for the Company.

I thank all our employees for the successful year just ended and look forward to our continued growth.

Nigel McNair Scott

  Chief Executive Officer's Statement

The first year of my tenure as Chief Executive identified a number of initiatives that needed to be implemented in order to improve operations and divest non-core assets. The past year has seen this implementation. This has not been without its challenges and more hard work will be required in the year ahead as we strive to deliver shareholder value in a challenging market environment. Operational highlights include a 10 per cent growth in continuing operations gold production to 157,907 ounces, at a cash cost of US$316/oz which was well below average industry costs and placed the Company in the lower quartile of cash costs for gold producers globally. The work undertaken, and ongoing, at both Penjom and North Lanut ensures the Company's mines are well positioned to face future challenges and exploit opportunities. This includes the expansion at Penjom to offset the impact of lower grades, and initiatives at North Lanut to optimise gold recovery as we encounter higher grades than previously modeled and the transition to more sulphidic ore. The sale of ZGC in Tajikistan has allowed the Company to pursue a clear strategy of growth and operational excellence.

Growing ambitions

Avocet will continue to invest in its existing operations to expand resources and mine lives, and by leveraging off its expert employees and the infrastructure already in place. Investment in the Company's existing operations also provides a firm platform for greenfield exploration and acquisitions in the region. The Company has invested US$20 million in equipment and infrastructure for Penjom's expansion, and resource development programmes are ongoing at both mines. These have already generated good results. At the end of the year the Company announced an increase in Penjom resources following over 27,000 metres of predominantly infill drilling to November 2007. Over the next year a programme of step out drilling will take place at Penjom of more than 70,000 metres, including deep drilling to assess the potential for deeper extensions to the orebody that may allow for underground mining. In December 2007 North Lanut announced an increase in resources from the comparatively modest 5,500 metres drilled. In the next year some 30,000 metres will be drilled in the North Lanut area of interest. Encouraging results have already been announced in May 2008, indicating that the trend of higher grades than in the current resource model is likely to continue at North Lanut albeit with a trend towards more sulphidic material.

In April 2008 the Company announced its decision to re-scope the Bakan project in order to enhance the value of the new mine, as the higher grades experienced this year at North Lanut are expected to have implications for the Bakan resource. Given the similar diamond drilling method applied in previous resource definition drilling at Bakan and the similar metallurgy to North Lanut, management believes that the grades at Bakan also have the potential to be understated. The re-scoping will involve reassessing ore grades, further drilling to add resources, especially in prospective areas with limited or no drilling, optimising the mine's infrastructure, equipment and processes, including crushing to enhance recoveries, and obtaining all permitting approvals required for the re-scoped project.

Greenfield exploration during the year focused principally in Indonesia and more particularly on the Banda properties announced last year. Management believes that several of these prospects have potential for over a million ounces of resource, with initial positive results being announced in December 2007 at the most advanced project, Doup, and more recently at the Tanoyan prospect. The portfolio of greenfield exploration projects continues to be enhanced, with the most recent addition, Seruyung in north east Kalimantan, soon to be drilled following agreement of an earn-in on this highly prospective property with potential for low cost dump leaching. Within its strong pipeline of prospects, the Company intends to concentrate its efforts on those with the potential to become mines producing +100,000 ounces per annum and/or with a million ounces of resource. Smaller exploration properties are likely to be disposed for value, as occurred with the Buffalo Reef prospect sold during the year for a US$8.0 million profit, unless synergies with our other operations justify a lower production threshold.

Avocet intends to generate growth both organically and through acquisition. In accordance with this strategy, the Company has reviewed acquisition opportunities from time to time and will continue to do so.

Financial results

The combination of a 10 per cent increase in ounces produced, lower cash costs and average gold prices received 26 per cent higher than in the year to 31 March 2007 resulted in profit before tax and exceptionals of US$52.4 million, an increase of 126 per cent compared with the previous year. These figures exclude profits on disposals totaling US$21.2 million which the Group made in the first half of the year on the sale of ZGC and the Buffalo Reef prospect in Malaysia. They also exclude an unrealised, non-cash mark to market loss of US$36.0 million on the Company's gold collar as required by IFRS. Cash generated from operating activities of US$61.4 million was 161 per cent higher than the previous year, while net assets at 31 March 2008 of US$168.2 million were 22 per cent higher than at 31 March 2007. At the year end the Group had US$122.6 million of cash and no debt.

 

Production and unit costs

Penjom production statistics Years ended 31 March		2004		2005		2006		2007		2008
Ore mined (tonnes)		826,000		832,000		629,000		443,000		561,000
Waste mined (tonnes)		12,464,000		13,244,000		18,927,000		16,941,000		16,697,000
Ore and waste mined (tonnes)		13,290,000		14,076,000		19,556,000		17,384,000		17,258,000
Ore processed (tonnes)		559,200		527,500		573,700		570,100		596,100
Average ore head grade (g/t)		7.73		7.92		7.10		5.67		4.84
Process recovery rate		90%		89%		91%		92%		91%
Gold produced (oz)		124,430		119,850		117,680		95,966		83,724
Cash costs (US$/oz)
Mining		106		109		141		212		159
Processing		52		57		60		80		97
Royalties and overheads		34		37		41		59		78
Total cash cost		192		203		242		351		334

North Lanut production statistics Years ended 31 March	2005(1)	2006	2007	2008
Ore mined (tonnes)	429,000	1,333,000	1,255,000	1,969,000
Waste mined (tonnes)	556,000	1,801,000	2,322,000	1,144,000
Ore and waste mined (tonnes)	985,000	3,134,000	3,577,000	3,113,000
Ore leached (tonnes)	302,000	1,327,000	1,157,000	1,683,000
Average ore head grade (g/t)	1.45	1.65	1.86	2.54
Process recovery rate	63%	75%	69%	54%
Gold produced (oz)	8,852	54,520	48,170	74,183
Cash costs (US$/oz)
Mining	274	96	188	139
Processing	69	39	68	67
Royalties and overheads	157	66	98	89
Total cash cost	500	201	354	295
(1) North Lanut commenced production in October 2004

Gold production from continuing operations grew by 13,771 ounces to 157,907 ounces, a rise of 10 per cent. This increase reflects a reduction of 12,242 ounces (13 per cent) at Penjom, more than compensated for by an increase of 26,013 ounces (54 per cent) at North Lanut, with both variances being heavily influenced by fluctuations in grade. As anticipated, Penjom's milled grade fell in the year as the mine transitions from a high grade operation to a larger mine at lower grades: the grade dropped 15 per cent from 5.67 g/t to 4.84 g/t. Although the nature of Penjom's orebody means that grades will continue to fluctuate, production in the next year will be underpinned by a full year's availability of the expanded mining fleet and larger milling capacity. At North Lanut analysis indicates that the +50 per cent positive variance in grades compared with the resource model reflects gold being washed out of the sample during past diamond drilling. The positive variance is expected to continue although at a lower percentage above the model. However, production in the next year will be reduced by longer leach times required as the ore becomes increasingly sulphidic. Crushing of ore, separate processing of each type of ore, and a plant upgrade are initiatives under way to mitigate the threat of lower recovery.

Cash costs of continuing operations fell from US$352/oz to US$316/oz. Significant upward pressure on costs, especially fuel, was offset by higher production and by deferral of US$6.9 million of excess stripping costs associated with the pit expansion at Penjom, which reduced the overall cash cost of continuing operations by US$42/oz. Importantly, Penjom's mining cost of US$1.16 per tonne was kept below last year's cost of US$1.17 per tonne. With oil prices at record levels, the Group's unit costs, like those of its peers, are expected to rise. However, the Group intends to continue producing gold at costs below the industry average, which some analysts estimate could be in excess of US$450/oz for 2008.

People

Avocet has strong management teams with a proven track record of finding resources at low cost, building mines and operating them efficiently. The Company continued to strengthen its operational management during the year in order to meet challenges at existing operations and enable the Group to manage the growth it aspires to, both organic and by acquisition. This has been achieved at a time of increased competition for skilled mining personnel and rising labour costs, and Avocet's success in attracting talent is a testament to its appeal as an ambitious, opportunity driven company; the fact that the majority of our managers are shareholders is particularly pleasing. The Company will continue to enhance its processes and structures in order to support its management in addressing the challenges of the future. I am especially proud of the teams we have assembled and thank all of them for their continued hard work and dedication.

Jonathan Henry

  CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008

		2008	2007
	note	US$000	US$000
Revenue
Continuing operations		123,938	86,818
Discontinued operations		4,765	21,418
		128,703	108,236
Cost of sales
Continuing operations		(65,004)	(59,284)
Discontinued operations		(8,751)	(26,087)
		(73,755)	(85,371)
Gross profit		54,948	22,865
Administrative expenses - continuing operations		(5,292)	(3,636)
Share based payment - continuing operations		(1,618)	(961)
Operating profit		48,038	18,268
Profit on disposal of non-current asset investments	3	8,904	-
Profit on disposal of discontinued operations	3	12,297	-
Finance items - continuing operations
(Losses)/gains on gold collar not qualifying for hedge accounting	6	(36,025)	416
Exchange (losses)/gains		(190)	2,234
Finance income		4,655	2,822
Finance expense		(96)	(112)
Profit/(loss) before taxation
Continuing operations		29,272	28,297
Discontinued operations		8,311	(4,669)
Profit before taxation		37,583	23,628
Analysed as: Profit before taxation and exceptional items		52,407	23,212
Exceptional items - profits on disposals and (losses)/gains on gold collar		(14,824)	416
Profit before taxation		37,583	23,628
Taxation
Continuing operations		(5,625)	(6,058)
Discontinued operations		(47)	(226)
		(5,672)	(6,284)
Profit/(loss) for the period
Profit for the period from continuing operations		23,647	22,239
Profit/(loss) for the period from discontinued operations	2	8,264	(4,895)
Profit  for the period		31,911	17,344
Attributable to:
Equity shareholders of the parent company		28,348	17,619
Minority interests		3,563	(275)
		31,911	17,344
Earnings per share	4
Basic (cents per share)		23.59	14.74
Diluted (cents per share)		23.19	14.45
Earnings per share from continuing operations
Basic (cents per share)		16.23	17.75
Diluted (cents per share)		15.95	17.41
Earnings per share from discontinued operations
Basic (cents per share)		7.36	(3.01)
Diluted (cents per share)		7.23	(3.01)

  CONSOLIDATED BALANCE SHEET

AT 31 MARCH 2008

		2008	2007
	note	US$000	US$000
Assets
Non-current assets
Goodwill		8,678	5,488
Intangible assets	5	23,810	12,224
Property plant and equipment		54,009	48,722
Other financial assets		8,323	3,765
Deferred tax assets		16,512	4,871
		111,332	75,070
Current assets
Inventories		17,350	26,421
Trade and other receivables		5,287	6,303
Other financial assets		-	981
Cash and bank balances		122,596	65,299
		145,233	99,004
Current liabilities
Trade and other payables		17,684	16,142
Current tax liabilities		9,656	1,727
		27,340	17,869
Non-current liabilities
Other financial liabilities	6	45,600	9,575
Deferred tax liabilities		3,579	4,293
Other liabilities	7	11,836	4,738
		61,015	18,606
Net assets		168,210	137,599
Capital and reserves
Issued capital		9,867	9,867
Share premium		52,834	52,834
Other reserves		11,454	13,894
Retained earnings		88,390	60,281
Total equity attributable to the parent		162,545	136,876
Minority interests		5,665	723
Total equity		168,210	137,599

  

 CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008

	2008	2007
	US$000	US$000
Cash flows from operating activities
Profit for the period	31,911	17,344
Adjusted for:
Depreciation of non-current assets	13,579	6,895
Exploration costs written off	-	242
Share based payment	1,618	961
Provisions	580	217
Taxation in the income statement	5,672	6,284
Non operating items in the income statement	22,752	(5,360)
	76,112	26,583
Movements in working capital:
Increase in inventory	(2,687)	(2,638)
Increase in trade and other receivables	(13,650)	(2,882)
Increase in trade and other payables	5,660	4,781
Net cash generated from operations	65,435	25,844
Interest received	4,655	2,424
Interest paid	(96)	(112)
Income tax paid	(8,692)	(4,669)
Net cash generated by operating activities	61,302	23,487
Cash flows from investing activities
Proceeds from sale of fixed asset investments	46,149	-
Payments for property plant and equipment	(29,957)	(13,264)
Deferred consideration	(1,994)	(1,196)
Exploration and evaluation expenses	(13,944)	(9,203)
Net cash movement on sale of subsidiary	(87)	-
Net cash generated/(used) by investing activities	167	(23,663)
Cash flows from financing activities
Proceeds from issue of equity shares	824	56,733
Issue costs	-	(2,610)
Treasury and EBT shares purchased	(4,164)	(3,220)
Capital repayments on finance leases	(642)	(580)
Net cash (used in)/generated by financing activities	(3,982)	50,323
Net increase in cash and cash equivalents	57,487	50,147
Exchange (losses)/gains	(190)	2,234
Total increase in cash and cash equivalents	57,297	52,381
Cash and cash equivalents at the start of the period	65,299	12,918
Cash and cash equivalents at the end of the period	122,596	65,299

The Group disposed of its ZGC operation in Tajikistan and its UK subsidiary Commonwealth & British Minerals (UK) Ltd, through which ZGC was held, on 9 July 2007. The net cash used in operating activities by the disposed operations up to the date of disposal was US$3,762,000 (2007 - US$6,957,000) and net cash used in investing activities was US$431,000 (2007 - US$2,729,000).

CONSOLIDATED STATEMENT OF EQUITY

FOR THE YEAR ENDED 31 MARCH 2008

	Share capital	Share premium	Other reserve	Retained earnings	Minority interest	Total equity
	US$000	US$000	US$000	US$000	US$000	US$000
At 1 April 2006	8,445	133	17,337	41,701	998	68,614
Profit for the period	-	-	-	17,619	(275)	17,344
Exchange differences on translation of foreign operations	-	-	(64)	-	-	(64)
Revaluation of other financial assets	-	-	(555)	-	-	(555)
Total recognised in income and expense for the year	-	-	(619)	17,619	(275)	16,725
Equity settled share options	-	-	-	961	-	961
Issue of shares	1,422	52,701	-	-	-	54,123
Investment in own shares	-	-	(2,824)	-	-	(2,824)
At 31 March 2007	9,867	52,834	13,894	60,281	723	137,599
Profit for the period	-	-	-	28,348	3,563	31,911
Exchange differences on translation of foreign operations	-	-	168	-	-	168
Revaluation of other financial assets	-	-	(459)	-	-	(459)
Total recognised in income and expense for the year	-	-	(291)	28,348	3,563	31,620
Equity settled share options	-	-	-	1,618	-	1,618
Transfer on issue from treasury shares	-	-	-	(876)	-	(876)
Investment in own shares	-	-	(2,149)			(2,149)
Disposals	-	-		(981)	1,379	398
At 31 March 2008	9,867	52,834	11,454	88,390	5,665	168,210

 

Notes to the Financial Statements

1. Adoption of International Financial Reporting Standards (IFRS) and basis of preparation

The Group adopted IFRS with effect from 1 April 2007 and has accordingly prepared these consolidated financial statements under IFRS for the year ended 31 March 2008, the first annual reporting date for which the Group is required to apply IFRS. The consolidated financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union as at 31 March 2008.

First time adoption of IFRS 

IFRS requires that an opening IFRS balance sheet be prepared at the transition date to IFRS, which is a date one year prior to the adoption of IFRS in order to ensure that appropriate comparative information may be presented. The Group has taken advantage of IFRS 1.25B exemption which permits application of IFRS 2 from the transition date, rather than from January 2005. The Group's opening IFRS balance sheet at 1 April 2006 has been prepared in accordance with IFRS 1 - First time adoption and the Group has elected to apply the exemption available on first time adoption whereby business combinations that occurred before the opening IFRS balance sheet date are exempt from the application of IFRS 3 - Business combinations. The format of financial statements and certain accounting policies differ under IFRS compared with UK GAAP. Comparative financial information previously published under UK GAAP has therefore been adjusted on an IFRS basis for the opening balance sheet at 1 April 2006 and the year ended 31 March 2007. 

2. Discontinued operations

Discontinued operations represent the results of the Company's ZGC operation in Tajikistan and its UK subsidiary Commonwealth & British Minerals (UK) Ltd, through which ZGC was held, the disposal of which was announced on 28 June 2007 with completion occurring on 9 July 2007.

3. Profits on disposals

The profit on disposal of non-current asset investments primarily relates to the divestment in June 2007 of the Company's interest in Damar Consolidated Exploration Sdn Bhd, the owner of the Buffalo Reef prospects in Malaysia. The profit on disposal of discontinued operations represents the profit on disposal of ZGC and Commonwealth & British Minerals (UK) Ltd.

4. Earnings per ordinary share

The calculation is based on profits of US$28,348,000 (2007 - restated US$17,619,000) and on a weighted average number of shares in issue of 120,186,174 (2007 - 119,543,971).  The fully diluted calculation of earnings per share is based on profits of US$28,348,000 (2007 - US$16,517,000) and 122,256,709 shares (2007 - 121,893,361 shares).

5. Intangible assets

Intangible assets represent deferred exploration which increased during the year due to exploration expenditure on the Banda properties whose acquisition was announced in July 2007, as well as on the Company's other exploration prospects.

6. Other financial liabilities

Other financial liabilities represent the fair value liability of the Group's gold collar. The gold collar consists of call options over 190,000 ounces exercisable at US$755/oz between January 2010 and July 2011, and put options over 400,000 ounces exercisable at US$600/oz between now and July 2011. In accordance with IFRS the collar is fair valued at each balance sheet date and changes in fair value are taken to the income statement. At the year end date of 31 March 2008, the gold price was US$918 per ounce, compared with US$658 per ounce at 31 March 2007. As a result of the increase in price, the Group's gold collar represented a liability at 31 March 2008 of US$45.6 million compared with a liability of US$9.6 million at 1 April 2007. In these preliminary full year results, a pre-tax mark to market loss on the collar of US$36.0 million has been recognised, reflecting the strengthening of the gold price since the start of the financial year.

7. Other liabilities

Other liabilities include deferred consideration in respect of Avocet's 2002 acquisition of PT Avocet Bolaang Mongondow in Indonesia, as well as closure provisions totaling US$5.0 million which were recognised during the year and which account for the majority of the year on year increase. 

8. Financial Information

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. 

The consolidated balance sheet at 31 March 2008 and the consolidated income statement, consolidated cash flow statement and other primary statements and associated notes for the year then ended have been extracted from the Group's 2008 statutory financial statements (which have not yet been filed with Companies House) upon which the auditors' opinion is unqualified, and does not include any statement under Section 237 of the Companies Act 1985.

FR RPMATMMAMBRP

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