23rd Sep 2008 07:00
Avocet Mining PLC
AVOCET EXPANDS INTO THE PHILIPPINES
Avocet Mining PLC ("Avocet" or "the Company") announces that it has expanded its exploration presence to the Philippines by signing a Memorandum of Understanding ("MoU") with MRL Gold Philippines ("MRL"), a subsidiary of Toronto-listed Mindoro Resources Ltd ("Mindoro"). The terms of the MoU give Avocet the right to earn up to a 75% economic interest in the Archangel Project ("the Project"). The Project, which encompasses the Kay Tanda gold-silver resource and several porphyry copper-gold prospects, covers 14.3 square kilometres in the Batangas Province of southern Luzon.
Kay Tanda is a multiple-mineralised system with epithermal quartz veins and hydrothermal breccias overprinting quartz stockworks and silica-alunite alteration related to deeper porphyry copper mineralisation. The Kay Tanda prospect is defined by a 1.5 x 1.4 kilometre induced polarization anomaly that is part of a much larger anomaly extending over six kilometres to the northeast. To date, drilling has been conducted only on the Kay Tanda part of the larger anomaly.
Mindoro has completed 147 reverse circulation and 26 diamond drill holes at Kay Tanda. Almost all holes encountered near-surface, gently-dipping and blanket-like low-grade stockwork mineralisation, which is strongly to partially oxidised to depths of 40 to 160 metres. Drilling, especially at deeper levels, has encountered at least five steeply-dipping, higher-grade zones with bonanza grades of up to 246 g/t Au and over 1,000 g/t Ag, which are interpreted as structurally controlled upflow or "feeder" zones.
The Project is located close to Manila, capital city of the Philippines, with easy access via a major highway with a final short drive along a serviceable asphalt and gravel coastal road. It is located between one and two kilometres from the coast in an area covered by subsistence farmland.
On 6 February 2008, Mindoro released a NI 43-101 compliant mineral resource estimate that included Indicated Resources of 3.4 Mt @ 0.88 g/t Au and 8.0 g/t Ag (containing 95,000 ounces gold) and Inferred Resources of 11.6 Mt @ 0.70 g/t Au and 3.0 g/t Ag (containing 262,000 ounces gold). This mineral resource estimate excludes almost two-thirds of the drilled mineralisation where the geological controls on mineralisation are poorly understood, including the high-grade feeder zones. Avocet anticipates that the Project has significant upside potential that could total more than one million ounces of gold and has committed to an initial six month due diligence programme at the Company's expense, including a minimum 1,500 metres of diamond drilling that will target the sparsely-drilled high-grade zones. This programme is designed to comprehensively evaluate the Kay Tanda Project with a view to completing a transaction that can fast-track the project to feasibility and thereafter to mine development. This would include a twelve-month programme of additional drilling, metallurgical test work and engineering studies.
Under the terms of the MoU, Avocet will fund all exploration on the Project until a decision to mine is reached. At this point, Avocet will make a payment of US$4 million in cash and/or Avocet shares to MRL, as will be mutually agreed in the final agreement. MRL will also be entitled to receive a two per cent net smelter royalty on production capped at the mineral reserves defined by the feasibility study; and will be responsible for funding its share of capital and operating costs. Egerton Gold Philippines, the underlying claim holders, will also receive a US$1 million cash payment on commencement of commercial production from the Project, as well as an uncapped 1 per cent net smelter royalty.
Jonathan Henry, Chief Executive Officer, commented:
"This transaction adds to our portfolio of advanced exploration projects with the potential to become a producing asset within three to four years. Entry to the Philippines represents an expansion of our geographic presence to an extremely prospective new country in South East Asia. We continue to review other opportunities in the region."
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Avocet Mining PLC |
Buchanan Communications |
Ambrian Partners Limited |
JPMorgan Cazenove |
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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 74,183 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.
All references to resources and exploration results have been approved for release by Mr Peter Flindell, BSc (Hons) MAusIMM, Chief Geologist for Avocet, who has more than 20 years experience in the field of activity concerned and is a Competent Person as defined by the JORC Code (2004). He has consented to the inclusion of the material in the form and context in which it appears.
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