Indaba Mining Conference February 2011

Transcription

1 Indaba Mining Conference 7 10 February 2011

2 Cautionary note DISCLAIMER 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 other person who receives this Presentation 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. While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees 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 or completeness 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 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, from the use of this Presentation. Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent. 2

3 Focused on West Africa Conditional sale of assets in Asia for US$200 m cash announced Dec ,396 oz produced by Group in 2010 Inata gold mine in Burkina Faso o o o 2010 production: 137,732 oz at US$531/oz 2011 guidance: 165,000 oz LoM cash costs: US$ /oz Exploration upside in Bélahouro district covering total of 1,660 km 2 around Inata o 200,000 m programme in progress o Targeting a doubling of Inata s reserves by Q Exciting potential in Guinea o Exploration on 4 projects in 2011, including the Tri-K project (0.7 Moz) o Target 2 Moz resource by end 2011 Guinea Tri-K (Koulékoun) (0.7 Moz) Producing asset Exploration asset Mali Bélahouro (0.6 Moz) INATA (1.8 Moz) Burkina Faso 100% Resources reported for each asset 3

4 240 DATA REBASED TO AVM SHARE PRICE 220 Corporate overview Largest shareholders o Elliott 13.8 % o Datum 12.4 % o BlackRock 10.2 % o JP Morgan 7.8 % Directors o Russell Edey, Chairman (recent appointment) o Harald Arnet o Mike Donoghue o Robert Pilkington o Barry Rourke (recent appointment) o Brett Richards, CEO o Mike Norris, Finance Director Exco o Brett Richards o Mike Norris o Peter Flindell o Richard Gray o Hans-Arne L orange Market statistics* OSE & AIM - AVM p Market capitalisation US$687.9 m Shares outstanding m Cash ( ) US$51.7 m Net debt ( ) US$26.3 m Enterprise value US$714.2 m Share price performance (12 months) AVOCET MINING GOLD FTSE GOLD MINES * All figures as of , unless otherwise stated 4

5 Q4 2010: highlights Q4 Group gold production of 70,857 oz Includes Inata production of 46,208 oz at a cash cost of US$511/oz* 2010 full year production of 236,396 oz Exceeded 2010 full year production guidance of 220,000 oz 166% up from previous year (2009: 109,548 oz) 2010 Group cash cost: US$660/oz (2009: US$639/oz) Inata plant expansion announced LoM average production increase from 120,000 oz p.a. to 165,000 oz p.a. Accelerated exploration programme initiated 561,100 oz initial resource announced at Souma in Q ,000 m drilling campaign at Inata and surrounding Bélahouro district Guinea: VTEM survey plus 88,000 m of drilling commenced in Q * Includes US$2.7m adjustment to reflect a government decree on 31 December 2010 that government royalties for 2010 should be charged at 3% rather than 5% 5

6 Cash costs per ounce Gold ounces produced Ore tonnes processed Inata: transforming the Company Successful production ramp up, completed in Q Production to increase from 137,732 oz in 2010 to 165,000 oz in 2011 Cash costs to remain low relative to West African producers Gold recoveries remain above expectation at 93-95% Cash costs versus guidance 700, , , , , , ,000-50,000 40,000 30,000 Ore tonnes processed per quarter Q Q Q Q Actual tonnage processed Current nameplate capacity (2.25 Mt p.a.) Gold production per quarter , , Q Q Q4 2010* Q Q Q Q Inata cash costs Actual gold production Inata cost guidance (lower limit) Initial target: 120,000 oz p.a. equivalent Inata cost guidance (upper limit) Revised target: 165,000 oz p.a. equivalent 6 * Includes US$2.7m adjustment to reflect a government decree on 31 December 2010 that government royalties for 2010 should be charged at 3% rather than 5% 6

7 Conditional sale of South East Asian assets Announced 24 December 2010 o Completion expected in Q Binding agreement signed for the conditional sale of all South East Asian assets to J&Partners o J&Partners is a mining fund established by the Indonesian family that sold Indonesia s 2nd largest mining contractor in November 2009 o Sale is subject to certain rights of first refusal held by third parties Cash consideration of US$200 m* o Initial consideration (received in escrow): US$10 m o Second tranche (payable into escrow end February 2011): US$100 m o Final tranche (on completion): US$90 m * On a cash free, debt free basis, and subject to working capital adjustment - actual proceeds may therefore be greater or less than US$200 million 7

8 Gold mining in West Africa 8

9 Gold mining in West Africa Mauritania Country Birimian Geology (km 2 ) Gold Resources (Moz) Gold Resources (%) Senegal Mali Burkina Faso Niger Ghana 45, Mali 124, Guinea 27, Guinea Burkina Faso 60, Côte d Ivoire Ghana Cote d Ivoire 113, Senegal 6, Mauritania n/a 3 2 Source: Ampella Mining Approx. outline of Birimian Greenstone Belt Inata Mine Avocet Mining-owned exploration project 9

10 Gold mining in Burkina Faso 2003 mining code o 3-4 year tax holiday o 20% corporation tax o 5% royalty o 10% free carried interest Rapidly expanding mining sector o Only 1 gold mine operating in 2007 o 6 gold mines operational o Mines produced over 700,000 ounces in 2010 Mana (Semafo) 179,700 oz Inata (Avocet) 137,732 oz Kalsaka (Cluff) 74,000 oz Essakane (IAMGold) 135,900 oz Taparko (High River) 120,000 oz * Over 20 listed gold producers and explorers operating in country Youga (Etruscan) 82,400 oz Prospective Birimian geology Gold deposit / resource Producing gold mine; number of ounces shown represent 2010 gold production * Taparko production for 12 months to 30 September

11 Gold mining and exploration in Guinea Siguiri (7.8 Moz, Anglogold Ashanti) LEFA (5.2 Moz, Crew Gold) Tri-K (0.7 Moz, Avocet) AVM permits Kouroussa (1 Moz, Cassidy) Kineiro (1 Moz, SEMAFO) Prospective Birimian geology Gold deposit / resource Project with gold resource in 2010 Untapped mineral potential o Two +5Moz Au deposits o Three ~1Moz Au deposits o Extensive under-explored Birimian geology o 2 strongly mineralised belts extend from Mali Transition to civilian government o First free & fair election since 1952* o Elections concluded in December 2010, declaring Alpha Condé as new president o Heralds new era in Guinean politics * Based on views published by the Carter Centre (US-based NGO) 11

12 Operational review Burkina Faso Inata gold mine & Bélahouro district 12

13 Inata: successful ramp-up completed Q4 production: 46,208 oz o Increased 14% vs Q o Full year production of 137,732 oz o Production exceeds guidance of 120,000 oz o Costs in line with guidance of US$ /oz Mining: o Ore mining in both Inata North and Central o Second mining fleet now fully operational and mining rates now reflect new mine plan Processing: o Operating above the 287 tph design capacity o Sustained high recoveries despite higher throughput Production statistics Q Q Ore mined (t) 638, ,000 Total movement (t) 5,007,000 3,100,000 Ore processed (t) 593, ,000 Average head grade (g/t) Gold recovery rate (%) 94% 94% Gold production 46,208 40,461 * Includes US$2.7m adjustment to reflect a government decree on 31 December 2010 that government royalties for 2010 should be charged at 3% rather than 5% Cash costs (US$/oz) - mining - processing - royalties and overheads Total cash cost *

14 Inata: increasing production capacity Increase in average life of mine production from 120,000 ounces p.a. to 165,000 ounces p.a. until 2016: o Based on increased Mineral Reserves (announced Q3 2010*) and further debottlenecking o Gold production to be maintained at current levels, despite longer term decline in grade to reserve levels o Stripping to accelerate in Inata Central and South pits o Third mining fleet ordered and expected to commission in Q o Higher strip ratio in 2011 likely to result in cash costs at upper end of US$ /oz LoM range Increase in production will further enhance Avocet s exposure to the gold spot price * Reserve increased by 25% to 1,081,500 ounces in Q

15 Inata: drilling within the mining licence Latest drilling results announced 7 February 2011 o 55,000 m of drilling completed o Assays received from 28,579 m of drilling, testing northern extensions of resource at Inata North and Sayouba, as well as mineralisation below the current 1.84 Moz resource o Near surface intercepts are broader than indicated by previous wide-spaced exploration drill holes and of similar gold grade Inata Central Inata South Inata North Plant site Sayouba Inata North highlights: g/t Au from 93 m o incl g/t Au g/t Au from 146 m o incl g/t Au g/t Au from 89 m o incl g/t Au Sayouba highlights: g/t Au from 31 m g/t Au from 81 m g/t Au from 158 m o incl g/t Au g/t Au from 125 m o incl g/t Au 15

16 AVM in West Africa: achievements to date Commission Inata plant and ramp up to full production Increase resources Increase reserves and extend mine life Identify larger mineralised structures within Bélahouro district Commence accelerated exploration programmes in Bélahouro Commission second mining fleet Initiate drilling in Guinea Announce maiden resource estimate at Souma Trend Further increase Inata s reserves Commission third mining fleet Increase Inata plant throughput to enable LOM +165,000 oz p.a. Guinean exploration: complete VTEM survey to identify drill targets 16

17 Bélahouro: VTEM survey results Oka Gakinde N WESTERN DOMAIN CENTRAL DOMAIN EASTERN DOMAIN 5km Kourfadie Dynamite Damba INATA Gomde Barrage Gomde Barrage Miilam Gassel Garafo Fete Kole Pali Key: Priority drilling target Image: VTEM survey overlain with existing drill hole data. Warm colours (red/orange) indicate regions of more conductive geology 17

18 VTEM: multiple new targets highlighted Multiple untested conductive units west of Inata, highlighted by VTEM survey Different geological setting to Eastern Domain o Folded conductive units (carbonaceous shale) surrounding ovoid conductive lows (granites) o Gold associated with folded carbonaceous shale N 3km Kourfadie Targets include: o Along-strike extensions to Inata o VTEM highlights multiple untested conductive units west of Inata Damba INATA MINING LICENCE Image: VTEM survey overlain with existing drill hole data. Warm colours (red/orange) indicate regions of more conductive geology Pali Minfo Filio 18

19 Bélahouro: growing resources and reserves Programmes Q4 10 Jan 11 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1 12 RC/DD drilling and resource model reports Inata mining licence D D D/R D R D R Filio D R Damba D D/R Kourfadie D Souma Trend R RAB Drilling Filio D Damba D Kourfadie D Key: Indicates period of exploration activity R = resource model report D = drilling results 19

20 Operational review Guinea Tri-K, Balandougou, Kankan & Kolenda 20

21 Tri-K: exploration programme Tri-K comprises three main licences: Koulékoun, Kodiéran and Kodiafaran Drilling of existing targets underway: o Goals of increasing Koulékoun resource and establishing a maiden resource at Kodiéran o 48,000m RC drilling o 19,000m diamond drilling VTEM survey scheduled for H o Key stage in identifying new drill targets in largely under-explored region Total Tri-K resource target of 2 Moz Kodiéran 1A g/t Au g/t Au Currently drilling Koulékoun 666,500 ounces. Currently drilling Kodiéran 1B 2 km long orpaillage Drilling planned in Q4 Other programmes in Guinea: Kodiéran 2A o Balandougou - mapping & RAB drilling o Kolenda & Kankan trenching & RAB drilling N 5km Kodiafaran 21

22 Guinea: accelerating resource growth Programmes Q4 10 Jan 11 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1 12 Drilling & Resources Koulékoun D R D R D D/R Kodiéran D D/R D R Balandougou D D R D/R Regional Targets Tri-K D D Kankan D D Kolenda D D Key: Indicates period of exploration activity R = resource model report D = drilling results 22

23 Operational review South East Asia Penjom and North Lanut 23

24 South East Asia Combined gold production of 98,664 oz in 2010 Penjom Q4 production of 11,934 oz at cash cost of US$1,064/oz o Reflects lower grades and reduced equipment availability North Lanut Q4 production of 12,715 oz at cash cost of US$722/oz o Production in line with guidance o Recoveries affected by high rainfall o Increased costs related to increase haul distances and leach pad rehandling 2011 production guidance o Total of 8,000 oz per month from South East Asian assets until sale completes Q Production statistics Penjom North Lanut Ore mined (t) 137, ,000 Total movement (t) 3,910, ,000 Ore processed (t) 180, ,000 Average head grade (g/t) Gold recovery rate (%) 87% 53% Gold production 11,934 12,715 Cash costs (US$/oz) - mining - processing - royalties and overheads Total cash cost ,

25 Strategic direction and outlook Maximising value from South East Asian assets Conditional sale announced 24 December 2010 Cash consideration of US$200 million upon completion Completion expected in Q Realising and growing the potential of Inata Resources and reserves updated in Q On track for target of doubling Inata reserves by Q Increase in plant capacity announced Accelerated organic growth in West Africa 200,000 m drilling in and around Inata mining licence Drilling commenced at Tri-K & Balandougou Regular exploration updates in 2011 Ready and prepared to act on value adding acquisitions News flow in 2011 Continued review of M&A landscape in West Africa Regular drilling results throughout the year Completion of sale of South East Asian assets (Q2) Resource and reserve reports at Inata (Q2, Q3), Koulékoun (Q2) and Balandougou (Q3) Tri-K project to enter feasibility stage(q4) 25

26 Appendices 26

27 Board of Directors and senior management Board of Directors Exco R P Edey Non-executive chairman Brett Richards CEO Appointed to the Board in July He retired as Chairman of AngloGold Ashanti Ltd in May 2010 having been a member of the board since Nonexecutive Director of Old Mutual PLC and several companies in the Rothschild Group. He took over as Chairman of Avocet in September Brett was appointed CEO of the Company in July 2010, and brings significant experience working in Africa and developing larger mining companies that will be invaluable in realising Avocet s potential. Brett is a HR and operations executive with previous experience at Katanga Mining Limited, Kinross and Co-Steel Inc. Richard Gray EVP Operations West Africa Richard joined Avocet in June 2009 following the acquisition of Wega Mining. He has had a successful career in developing mining companies, including 15 years working in South Africa for Gencor Ltd, and 10 years in West Africa for Golden Star Resources Ltd. Mike Norris Finance Director Finance Director since July 2007 having previously been CFO since February Chartered accountant at Coopers & Lybrand before holding senior financial and operational roles at Rio Tinto PLC and Anglo American PLC. H Arnet Non-executive Director He is the Chief Executive Officer of Datum AS, Avocet's second largest shareholder. Mr. Arnet previously held the position of Senior Vice President, Corporate Finance, Norway for Svenska Handelsbanken Peter Flindell EVP Exploration Peter is a geologist with over 20 years experience in gold and copper exploration, resource evaluation and reserve development in South East Asia, Central Asia and North America. He joined the Group as Chief Geologist in May 2002 following 12 years with Newmont Mining Corporation. R A Pilkington Non-executive Director Managing Director of UBS Investment Bank and also a director of ASA Limited, an investment trust investing principally in South African gold mining companies. M J Donoghue Non-executive Director B J W Rourke Non-executive director He is a mining engineer with over 30 years experience in mining operations and new mine developments in Africa, Australia, South East Asia and Europe. Appointed in July He served as a Partner at PricewaterhouseCoopers for 17 years, acting as an advisor and auditor for several large and medium-sized businesses in both the public and private sector before retiring in He is also Chairman of the Audit Committee. Hans-Arne L orange EVP Business Development & Investor Relations Hans-Arne joined Avocet in June 2009 following the acquisition of Wega Mining. Previously he was Acting CEO of Wega Mining, having joined from Vyke Communications Plc, where he served as CEO. Prior to that position, he was CEO of Birdstep Technologies, Inc. 27

28 Financial summary Cash position Project finance facility Gold hedge Corporate facility Cash at bank US$51.7 m 1 Net debt US$26.3 m 1 US$65m project finance facility with Macquarie Bank Outstanding balance 1 : US$53 m 350,000 oz, at an average US$970/oz 2 Hedge delivery schedule of ~25,000 oz per quarter US$25m corporate revolving credit facility with Standard Chartered Bank, fully drawn Repayment schedule of US$6 m per quarter 1 As of 31 January As of 31 December

29 Group Reserves and Resources AVOCET GROUP Gross Net attributable Tonnes Grade (g/t) Contained Ounces Tonnes Grade (g/t) Contained Ounces Mineral Reserves -Proven 15,760, ,000 13,924, ,550 -Probable 10,195, ,800 9,516, ,900 - Reserves subtotal 25,955, ,684,800 23,440, ,533,450 Mineral Resources* -Measured 28,394, ,351,400 24,229, ,165,600 -Indicated 49,443, ,470,600 46,841, ,367,000 -Measured + Indicated 77,847, ,822,000 71,079, ,532,600 -Inferred 57,024, ,561,600 44,538, ,066,200 - Resources subtotal 134,871, ,383, ,618, ,598,900 * Mineral Resources include Reserves. Note: the above figures are rounded up/down where appropriate. Dates for reserve and resource estimates are outlined in the following slides 29

30 Burkina Faso Reserves and Resources INATA & BELAHOURO Gross Net attributable Tonnes Grade (g/t) Contained Ounces Tonnes (Mt) Grade (g/t) Contained Ounces Mineral Reserves -Proven 10,540, ,500 9,486, ,750 -Probable 5,760, ,000 5,184, ,600 - Reserves subtotal 16,300, ,081,500 14,670, ,350 Mineral Resources* -Measured 12,520, ,900 11,268, ,700 -Indicated 13,140, ,300 11,858, ,400 -Measured + Indicated 25,670, ,326,200 23,135, ,195,100 -Inferred 19,200, ,072,700 18,318, ,019,900 - Resources subtotal 44,870, ,398,900 41,453, ,215,100 * Mineral Resources include Reserves. Reserves as at 31 August 2010 Resources as at 30 June 2010 (Reserves were calculated at a 0.7 g/t Au cut-off and a stock pile is developed for all low grade ore ( g/t Au) that will be processed towards the end of the mine s life.) Note: the above figures are rounded up/down where appropriate. 30

31 Guinea Reserves and Resources TRI-K (KOULEKOUN) Mineral Reserves -Proven -Probable - Reserves subtotal Mineral Resources* Tonnes Gross Net attributable (100%) Grade (g/t) Contained Ounces Tonnes Grade (g/t) Contained Ounces -Measured -Indicated -Measured + Indicated 12,690,000 12,690, , ,000 12,690,000 12,690, , ,000 -Inferred 720, , , ,500 - Resources subtotal 13,410, ,500 13,410, ,500 * Mineral Resources include Reserves. Resources as at 31 December 2009 Note: the above figures are rounded up/down where appropriate. 31

32 Malaysia Reserves and Resources PENJOM Gross Net attributable (100%) Tonnes Grade (g/t) Contained Ounces Tonnes Grade (g/t) Contained Ounces Mineral Reserves -Proven 1,311, ,100 1,311, ,100 -Probable 3,922, ,500 3,922, ,500 - Reserves subtotal 5,233, ,600 5,233, ,600 Mineral Resources* -Measured 1,311, ,100 1,311, ,100 -Indicated 17,015, ,001,100 17,015, ,001,100 -Measured + Indicated 18,326, ,072,200 18,326, ,072,200 -Inferred 4,105, ,500 4,105, ,500 - Resources subtotal 22,431, ,280,700 22,431, ,280,700 * Mineral Resources include Reserves. Reserves and resources as at 31 December 09. Note: the above figures are rounded up/down where appropriate. Above table includes stockpiles and Kurnia in the resources 32

33 Indonesia Reserves and Resources INDONESIA Gross Net attributable Tonnes Grade (g/t) Contained Ounces Tonnes Grade (g/t) Contained Ounces Mineral Reserves -Proven 3,410, ,400 2,728, ,120 -Probable 428, , , ,680 - Reserves subtotal 3,838, ,500 3,070, ,800 Mineral Resources* -Measured 13,776, ,700 11,020, ,960 -Indicated 6,527, ,200 5,221, ,160 -Measured + Indicated 20,303, ,900 16,242, ,120 -Inferred 32,920, ,241,000 21,332, ,540 - Resources subtotal 53,223, ,999,900 37,574, ,406,660 * Mineral Resources include Reserves. Resources include North Lanut, Bakan and Doup projects, and as at 31 December 2009 Reserves figures are for North Lanut only (as at 31 December 2009). Attributable ounces are based on 80% ownership of North Lanut and Bakan, 60% ownership of Doup. Note: the above figures are rounded up/down where appropriate. 33