jpmorgancazenove uk corporate access day 2012 · 2012-05-31 · presentation are cautioned that we...

Avocet Mining JPMorganCazenove UK Corporate Access Day 2012 May 2012

DISCLAIMER

This Presentation is for information purposes in connection with Avocet Mining PLC’s (the “Company’s”) interim results presentation only. While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees, consultants or advisers give, have given or have authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability, completeness or suitability of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees, consultants or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of the accuracy or completeness of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising or out of or in connection with the use of this Presentation. Each party to whom this Presentation is made available must make its own independent assessment of the Company and the Presentation after making such investigations and taking such advice as may be deemed necessary. Any reliance placed on the Presentation is strictly at the risk of such person relying on such Presentation. This Presentation may contain forward-looking statements regarding the Company and its subsidiaries. These statements are based on various assumptions made by the Company. Such assumptions are subject to factors which are beyond our control and which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements may in some cases be identified by terminology such as “may”, “will”, “could”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. These forward looking statements are only predictions. Actual events or results may differ materially, and a number of factors may cause our actual results to differ materially from any such statement. Such factors include among others general market conditions, demand for our products, development in reserves and resources, unpredictable changes in regulations affecting our markets, market acceptance of products and such other factors that may be relevant from time to time. Although we believe that the expectations and assumptions reflected in the statements are reasonable, any person relying on such Information and Presentation are cautioned that we cannot guarantee future results, levels of activity, performance or achievement. In preparing this Presentation and except as required by law, we do not undertake or agree to any obligation or responsibility to provide the recipient with access to any additional information or to update this Presentation or Information or to correct any inaccuracies in, or omission from this Presentation or to update publicly any forward-looking statements for any reason after the date of this Presentation to conform these statements to actual results or to changes in our expectations. You are advised, however, to consult any further public disclosures made by us, such as filings made with the Alternative Investment Market, Oslo Stock Exchange or press releases. This Presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. Copies of this Presentation should not be distributed to any affiliates, third parties or indirect recipients in any manner whatsoever. The distribution of this Presentation in or to persons subject to other jurisdiction may be restricted by law and persons into whose possession this Presentation comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdictions. United Kingdom: This Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000 and therefore it is being delivered for information purposes only to a very limited number of persons and companies who are persons who have professional experience in matters relating to investments and who fall within the category of person set out in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or are high net worth companies within the meaning set out in Article 49 of the Order or are otherwise permitted to receive it. Any person who receives this Presentation who does not fall within the category of person set out in Article 19 and Article 49 of the Order should not rely or act upon it. By accepting this Presentation, the recipient represents and warrants that they are a person who falls within the above description of persons entitled to receive the Presentation.

AVOCET MINING * MAY 2012

OPERATING IN WEST AFRICA


AVOCET INVESTMENT CASE

1.  Sound financial position and strong dividend yield

2.  Solid producing operation with long life and cash flow generative

3.  Exploration and development potential on own land

4.  Experienced management team with significant track record of delivery

5.  Poised for transformational growth


•  EV: EBITDA 3.41

•  Gross cash of US$100.5 million at end Q1 2012

•  Dividend policy of US$20 million in dividends per annum

•  4.3% dividend yield at current share price


1. SOUND FINANCIAL POSITION

1. At current share price, balance sheet figures as at 30 March 2012, EBITDA as per Q1 2012 annualised

•  Total debt of US$23 million, debt free by Q2 2013

•  Cash generative operations

•  Healthy net cash position underpins growth projects


1. SOUND FINANCIAL POSITION

‐

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Q2 2011 Q3 2011 Q4 2011 Q1 2012

EBITDA FROM OPERATIONS

‐

5,000

10,000

15,000

20,000

25,000

30,000

Q2 2011 Q3 2011 Q4 2011 Q1 2012

NET OPERATING CASH FLOW

2. SOLID PRODUCING ASSET WITH LONG LIFE




Minfo Resource 0.47M oz. Reserve 0.22M oz.

Inata North Extension

Inata North Resource 1.7M oz. Reserve 0.92M oz.

Inata Central Resource 0.77M oz. Reserve 0.46M oz.

Inata South Resource 0.15M oz. Reserve 0.07M oz.

Inata Far South Resource 0.2M oz. Reserve 0.01M oz

Minfo East

Filio

Sayouba Resource 0.13M oz. Reserve 0.04M oz.

INATA MINERAL RESOURCE AND RESERVES INATA GOLD MINE LICENSE AREA

4.02

1.69

3.46

0.94

1.85

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Resource incl Souma Resource Reserve

1. Souma deposit is 23kms from existing plant in the Bélahouro exploration license area

1


•   First gold poured in Q4 2009

•   Ramp up to full production capacity in Q2 2010

•   Mining from 3 pits, 4th pit in Q3 2012

•   167,000 oz. produced in 2011 at cash cost of US$697 per oz.

•   Outstanding safety record demonstrates management’s competency


19,838 51,063

91,524

137,732

185,695 225,118

258,374

304,476 342,772

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

Inata Cumulative Gold Production - oz.

3. EXPLORATION AND DEVELOPMENT POTENTIAL

•   8 exploration licenses over 1,660 km2 in Bélahouro

•   Continuous Mineral Resource development - US$20 million exploration budget per annum •   Mineral Resource at Souma of 0.56M oz.


BÉLAHOURO EXPLORATION LICENSES

WESTERN DOMAIN

CENTRAL DOMAIN

EASTERN DOMAIN

INATA

Dynamite

Miilam

Gassel Garafo

Fete Kole

Pali

Kourfadie

Damba

Oka Gakinde

5km

Gomde Barrage

Priority drilling target

N

SOUMA TREND

Ouzemi

Filio

3. EXPLORATION AND DEVELOPMENT POTENTIAL

•   Tri-K in Guinea has a Mineral Resource of 2.2M oz.

•   Deposit lends itself to large scale mining operation

•   Recently renewed exploration license despite ongoing revisions to Mining Code

•   Avocet well positioned to bring Koulékoun at Tri-K into production

•   Encouraging signs of progress in revision of Mining Code


GUINEA EXPLORATION LICENSES

4. EXPERIENCED MANAGEMENT TEAM


Russell Edey Brett Richards Pete Flindell Mike Norris David Cather Richard Gray

4. EXPERIENCED MANAGEMENT TEAM


•  Board with relevant experience and technical insight

•  Management team delivery to date:

–  Identified and successfully procured West African assets

–  Commissioned Inata Gold Mine and ramped up production successfully

–  Tripled Mineral Reserve and Resource base in West Africa

–  Sold South East Asian assets at double market valuation

–  Stepped up company to LSE Main Board and FTSE 250 Index

•  Ready to execute on further transformation

5. POISED FOR TRANSFORMATIONAL GROWTH


•  Inata Mine Expansion will increase capacity and improve LOM returns

–  Standalone plant capable of treating deeper ore and different metallurgy

–  Greater processing flexibility

–  Benefits of scale – expansion reduces unit costs

•  Guinea expected to progress to feasibility in 2012

–  Potential to be a 250,000 oz. plus mine per annum

–  Will progress company towards target of being a 500,000 oz. producer by 2015

–  Expansion into second country improves company’s leading position in West Africa


60.00

70.00

80.00

90.00

100.00

110.00

120.00

130.00

140.00

AVM Gold FTSE Gold S&P/TSX Global Gold

5. POISED FOR TRANSFORMATIONAL GROWTH

•   Landscape open to consolidation •   Valuations attractive and allow for strategic M&A •   Geographical and operational diversification advantageous •   Larger, cash generative companies best placed to access finance necessary for growth

•  Solid production from Inata Gold Mine for over 2 years Production

•  Net cash of US$77million, cash generating operations •  4.3% dividend yield from US$20 million annual dividend Financials

•  2.24M oz. of Mineral Resource in Guinea •  Extensive exploration license surrounding Inata, incl. Souma Development

•  Experienced management with track record of transformational delivery •  Supported by strong Board with technical expertise Management

•  Inata Gold Mine to increases processing capacity •  Well positioned in Guinea to develop a mine at Tri-K •  Landscape open to consolidation

Growth

AVOCET MINING – RIGHT PLACE, RIGHT TIME


Avocet Mining – a leading West African gold mining and exploration company


INCOME STATEMENT- Q1 2012

Continuing Operations Q1 2012 Q4 2011 Increase/ (decrease)

US$ million

Revenue 60.3 70.5 (10.2)

Cash costs (32.6) (35.7) (3.1)

Inventory 5.2 (2.8) 2.4

Other cost of sales and expensed exploration (2.0) (1.4) 0.6

Admin and share based payments (2.7) (3.4) (0.7)

Admin (exceptional costs- LSE listing) - (3.1) (3.1)

Depreciation (6.6) (10.8) (4.2)

Net finance costs (0.7) (0.7) -

Profit before taxation 20.8 12.6 8.2

Taxation (6.8) (10.0) (3.2)

Profit for the quarter 14.0 2.6 11.4

EPS (cents per share) 6.33 0.9 5.43

EBITDA 28.1 27.2 0.9

•   Lower revenue due to lower ounces sold, compensated by favourable changes in inventory

•   Lower depreciation due to increased reserve ounces

-  Depreciation is calculated on LOM unit of production basis

•   Deferred tax provided on Inata profit

-  Cash tax expected to be payable from 2013


CASH FLOW – Q1 2012

Q1 2012 Q4 2011

US$ million

EBITDA 28.1 27.2 Working capital and interest (15.0) (15.8)

Provision/other non-cash 0.8 (1.0)

Operating cash flow 13.9 10.4

Capex (6.6) (7.1)

Exploration (8.1) (9.8)

Loan repayment (6.0) (6.0)

Net cash movement from disposal of investments 2.0 (2.6)

Other cash movement (0.2) -

Net cash flow (4.7) (15.1)

Opening cash 105.2 120.3

Closing cash 100.5 105.2

•   Working capital and interest included-

-  US$2.5 million decrease in head office creditors associated with the LSE listing

-  US$9.9 million increase in inventory - gold in circuit and poured gold not yet sold

-  US$2.3 million increase in receivables, principally VAT refunds


•   1996 - Listed on LSE with a market capitalisation of £72m -  Gold deposits in Peru -  Operating gold mine in Penjom, Malaysia -  Tungsten interests in Portugal, Peru and California

•   1999 - Divested tungsten operations to focus on gold •   2002 - Moved to AIM, with a market capitalisation of £12m

- Acquired 80% in North Lanut, Indonesia - Acquired 49% interest and management control in gold mining company

ZGC in Tajikistan •   2007 - Disposed of Tajikistan gold operations ZGC •   2008 - Acquisition of the Seruyung gold exploration project in Kalimantan, Indonesia •   2009 - Acquired Wega Mining and the Inata gold project, Burkina Faso - Poured first gold at Inata Mine •   2010 - Disposed of the Houndé licences in Burkina Faso to Avion

- Listed on the Oslo Axess list of the OSE - Agreed disposal of all South East Asian assets

•   2011 - Listed on Main Market of LSE -  Market capitalisation of £434m -  Joined FTSE 250 index in March 2012

AVOCET MINING HISTORY


MINERAL RESOURCES AND RESERVES: INATA

Gross Net attributable (90%)

Tonnes (Mt)

Grade (g/t)

Contained ounces

Tonnes (Mt)

Grade (g/t)

Contained ounces

Mineral Reserves Proven 16,091,000 1.72 888,000 14,482,000 1.72 799,000

Probable 17,234,000 1.70 940,000 15,510,000 1.70 846,000

ROM Stockpiles 497,000 1.25 20,000 447,000 1.25 18,000

Reserves total 33,822,000 1.70 1,848,000 30,440,000 1.70 1,663,000

Mineral Resources Measured 17,881,000 1.68 963,800 16,093,000 1.68 867,400

Indicated 39,446,000 1.35 1,712,000 35,501,000 1.35 1,541,000

Measured + Indicated 57,327,000 1.45 2,676,000 51,594,000 1.45 2,409,000

Inferred 17,846,000 1.36 779,000 16,061,000 1.36 701,000

Resources total 75,173,000 1.43 3,455,000 67,655,000 1.43 3,110,000

Mineral Reserves and Mineral Resources as at 31 December 2011

1.  Mineral Resources are inclusive of Mineral Reserves and reported above 0.5g/t Au cut off and below the 31 December 2011 topographic surface. The Mineral Resources were estimated by Mr David Williams (MAusIMM, MAIG) and Mr Sam Beckett (MAIG), both of whom are consultants employed by CSA Global Pty Ltd. Both Mr Williams and Mr Beckett have the experience relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Persons as defined by the Australasian JORC Code (2004) for the reporting of Exploration Results, Mineral Resources and Ore Reserves and as Qualified Persons as defined by the Canadian National Instrument 43-101 for the reporting of Exploration Results, Mineral Resources and Mineral Reserves (NI 43-101). Mr Williams and Mr Beckett have consented to the inclusion of the technical information in this report in the form and context in which it occurs.

2.  The Mineral Reserves were estimated by Mr Clayton Reeves (MSAIIM), Principal Mining Consultant, CSA Global (UK). Mr Reeves is a Competent Person as defined by the JORC Code and a Qualified Person as defined by NI-43-101. Mr Reeves has consented to the inclusion of the technical information in this report in the form and context in which it occurs.

3.  Avocet owns 90% of Société des Mines de Bélahouro SA, owner of the Inata Gold Mine. 4.  Rounding errors may occur.


MINERAL RESOURCES AND RESERVES: SOUMA


Tonnes (Mt)

Grade (g/t)

Contained ounces

Tonnes (Mt)

Grade (g/t)

Contained ounces

Mineral Reserves Proven ‐ ‐ ‐ ‐ ‐ ‐

Probable ‐ ‐ ‐ ‐ ‐ ‐

ROM Stockpiles ‐ ‐ ‐ ‐ ‐ ‐

Reserves total - - - - - -

Mineral Resources Measured ‐ ‐ ‐ ‐ ‐ ‐

Indicated 324,000 1.44 15,000 324,000 1.44 15,000

Measured + Indicated 324,000 1.44 15,000 324,000 1.44 15,000

Inferred 10,376,000 1.64 545,600 10,376,000 1.64 545,600

Resources total 10,700,000 1.63 561,000 10,700,000 1.63 561,000

Mineral resource estimate as at 31 October 2010

1.  Mineral Resources are reported above 0.5g/t Au cut off. The Mineral Resources were estimated by Mr David Williams (MAusIMM, MAIG), a consultant employed by CSA Global Pty Ltd. Mr Williams has the experience relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined by the Australasian JORC Code (2004) for the reporting of Exploration Results, Mineral Resources and Ore Reserves and as a Qualified Person as defined by the Canadian National Instrument 43-101 for the reporting of Exploration Results, Mineral Resources and Mineral Reserves (NI 43-101). Mr Williams consents to the inclusion of the technical information in this report in the form and context in which it occurs.

2.  Avocet owns 100% of the Souma property through its wholly-owned subsidiary, Goldbelt Resources (West Africa) SARL. 3.  Rounding errors may occur.


MINERAL RESOURCES AND RESERVES: TRI-K


Tonnes (Mt)

Grade (g/t)

Contained ounces

Tonnes (Mt)

Grade (g/t)

Contained ounces

Mineral Reserves Proven ‐ ‐ ‐ ‐ ‐ ‐

Probable ‐ ‐ ‐ ‐ ‐ ‐

ROM Stockpiles ‐ ‐ ‐ ‐ ‐ ‐

Reserves total - - - - - -

Mineral Resources Koulékoun

Measured ‐ ‐ ‐ ‐ ‐ ‐

Indicated 21,610,000 1.44 1,001,000 21,610,000 1.44 1,001,000

Measured + Indicated 21,610,000 1.44 1,001,000 21,610,000 1.44 1,001,000

Inferred 22,600,000 1.15 832,000 22,600,000 1.15 832,000

Kodiéran

Inferred 7,260,000 1.76 411,000 7,260,000 1.76 411,000

Resources total 51,470,000 1.36 2,244,000 51,470,000 1.36 2,244,000

Mineral Resources as at 20 December 2011

1.  TMineral Resources are reported above 0.5g/t Au cut off. The Company owns 100% of Wega Mining Guinée SA, owner of the Koulékoun gold project. The Mineral Resources were estimated by Mr David Williams (MAusIMM, MAIG), a consultant employed by CSA Global Pty Ltd. Mr Williams has the experience relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined by the Australasian JORC Code (2004) for the reporting of Exploration Results, Mineral Resources and Ore Reserves and as a Qualified Person as defined by the Canadian National Instrument 43-101 for the reporting of Exploration Results, Mineral Resources and Mineral Reserves (NI 43-101). Mr Williams consents to the inclusion of the technical information in this report in the form and context in which it occurs.

2.  Note: rounding errors may occur.


jpmorgancazenove uk corporate access day 2012 · 2012-05-31 · presentation are cautioned that we...

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