Avocet Mining. Investor Presentation. December 2011 February 2012

Transcription

1 Avocet Mining Investor Presentation December 2011 February 2012 Page 1

2 DISCLAIMER This Presentation is for information purposes in connection with Avocet Mining PLC s (the Company s ) preliminary 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. 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3 AVOCET MINING OVERVIEW Focused Focused exclusively on West African gold mining and exploration Strong balance sheet, fully financed and dividend paying Experienced Long corporate history dating back to early 1990 s, recently exited South East Asia Management with extensive regional and sector experience Producing Current assets in production for two years 167,000 oz. produced in 2011 Growing Growth potential from existing operations in Burkina Faso Advanced exploration projects in Guinea Page 3

4 AVOCET MINING LEADERSHIP Russell Edey Brett Richards Mike Norris Richard Gray Pete Flindell Chairman CEO FD VP Operations VP - Exploration Ex AngloGold - Ashanti Chairman Ex Anglo American Rothschild Advisory Extensive African experience Ex Katanga Mining Ex Kinross Gold Mechanical Engineer, MBA Cornell Ex Rio Tinto Ex Anglo American CA by profession Extensive West African experience Ex-Golden Star Resources Mining Engineer, Royal School of Mines Over 25 years experience as field geologist Ex Newmont Mining Discovered and developed two gold mines in Indonesia Page 4

5 2011 YEAR IN REVIEW Completed sale of South East Asian assets Restructured balance sheet, paid down US$25m debt, declared dividend Ramped up production capacity at Inata Gold Mine Delivered production and ahead of guidance at 167,000 oz. Doubled Mineral Reserve at Inata to 1.85 M oz. Achieved goal of 2M oz. in Guinea (Dec M oz.) Progressed Koulékoun project towards feasibility Page 5

6 AVOCET MINING OPERATIONS Burkina Faso Mineral Resource of 4.0 M oz. Mineral Reserve of 1.85 M oz. Operating gold mine at Inata First gold poured Q Produced 167,000 oz. in 2011 Forecast production of apx. 160,000 oz. in 2012 Guinea Mineral Resource of 2.24 M oz. Extensive land package across three key areas Tri-K, Balandougou, Kankan Feasibility study at Tri-K expected in 2012 Page 6

7 FINANCIAL OVERVIEW Top 5 Shareholders % 1 Elliott Management Datum BlackRock J.P. Morgan Van Eck 3.46 AU US$1744 AVM 2.37 Gold Index /11 02/11 03/11 04/11 05/11 06/11 07/11 08/11 09/11 10/11 11/11 12/11 01/12 Cash balance US$120.4m at end of Q Debt of US$35m at end of Q Regular dividend of US$20m pa, current yield of 3.1% 1 EV / EBITDA 1, 2 of 6.8 EV / Resource 1 of US$101.7 EV / Reserve 1 of US$ At current share price, balance sheet figures as at 30 September Based on consensus EBITDA forecast for FY2011 Page 7

8 Operations Page 8

9 BURKINA FASO Rapidly expanding mining sector - Only one gold mine operating in Six gold mines operational by Mines produced over 700,000 oz. in 2010 Over 30 listed gold producers and explorers in country Candidate country for EITI Page 9

10 INATA GOLD MINE Operating mine Inata produced 167,000 oz. in 2011 First gold poured 2009 Mineral Resource of 3.45 M oz. - Ore body open at depth and along strike Mineral Reserve of 1.85 M oz g/t Au Mineral Reserve grade Mining licence extends to 2027, across 26km 2 Page 10

11 INATA GOLD MINE Open pit mining across six pits Owner-operator mining fleets Processing via conventional CIL plant - Current capacity 2.7 M tpa Exceptional safety record 6 million injury free hours achieved by end 2011 Established Avocet Community Foundation - Over USD$500,000 invested in 2011 into water supply, community health, regional infrastructure programs Signatory to the International Cyanide Management Code Page 11

12 GUINEA Untapped mineral potential - Two +5 M oz. and three ~1 M oz. Au deposits - Extensive under-explored Birimian geology - Two strongly mineralised belts extend from Mali Three producing mines in operation since 2007 New Mining Code gazetted in January High level Government discussions commenced Candidate country for EITI Page 12

13 TRI-K Extensive land package across twelve exploration licences Most developed project is Tri-K - Mineral Resource of 2.24 M oz. - Mineral Resource grade of 1.36 g/t Au Within Tri-K, Koulékoun resource base is most advanced - Mineral Resource of 1.83 M oz. - Mineral Resource grade of 1.31 g/t Au Kodiéran 0.41 M oz. alone g/t Au g/t Au Currently drilling Anomalous gold low conductivity (granite) margin along major magnetic linear Fowara 6.28 g/t Au 3.70 g/t Au Anomalous gold over low conductivity (granite) body Koulékoun 1.83 M oz. alone Anomalous gold on margin of low-high conductor Kourounin 1.34 g/t Au 1.79 g/t Au Currently drilling Anomalous gold low conductivity (granite) margin along major magnetic linear 2km Kodiafaran Anomalous gold over NW-oriented linear conductors Page 13

14 KOULÉKOUN Cross section Koulékoun deposit 3D model Koulékoun deposit W 2.11 g/t Au 1.44 g/t Au EOH: 90m EOH: 100m 1.87 g/t Au 1.55 g/t Au 1.10 g/t Au 1.46 g/t Au assays pending EOH: 117.6m EOH: 265.9m EOH: 335.3m 1.28 g/t Au 0.67 g/t Au 1.13 g/t Au E EOH: 409.4m EOH: 497.1m EOH: 561.6m 2.44 g/t Au Mineralised drill intercept Dolerite Porphyry Outline of gold mineralisation Primary quartz-feldspar porphyry structure, with shallow cross cutting dolerite Anticipated circular pit with low strip ratio Infill drilling to improve Mineral Resource confidence ongoing Page 14

15 Growth Page 15

16 INATA GOLD MINE EXPANSION Current plant capacity of 160,000 oz. pa at LOM grade Mineral Reserve recently doubled to 1.85 M oz. extends LOM to 12.5 years - Optimal LOM below 10 years Scoping study initiated in H to significantly increase production. Options include: - Existing plant expansion - New resin in leach (RIL) plant construction - Heap leach construction Scoping study to be concluded Q1 2012, construction late 2012, production late 2013 Page 16

17 INATA EXPLORATION Mine license covers 26km 2, with significant exploration potential included under licence Further Mineral Resource and Mineral Reserve development ongoing Large system developing in Southern corridor Inata Far South, Minfo, Minfo East towards Filio 2012 exploration budget of USD$20m to develop resources and replenish reserves Inata North Extension 3.01 g/t Au from 93m Sayouba 48.5 g/t Au from 173m Inata North 3.73 g/t Au from 266.4m Inata Central 10.3 g/t Au from 122m Inata South 5.08 g/t Au from 61m Inata Far South 7.35 g/t Au from 97m Minfo 4.72 g/t Au from 5m Filio Minfo East 3.26 g/t Au from 49m Page 17

18 BÉLAHOURO EXPLORATION Priority drilling target Oka Gakinde N WESTERN DOMAIN CENTRAL DOMAIN EASTERN DOMAIN 5km Kourfadie SOUMA TREND Dynami te Damba a INATA Gomde Barrage Miilam Gassel Garafo Fete Kole Pali Filio Ouzemi Image: VTEM survey overlain with existing drill hole data. Page 18

19 KOULÉKOUN DEVELOPMENT Feasibility Regulatory framework clarified before commencement Study to be completed by early 2013 Resource Plant Capex Grade Current resource of 1.8 M oz. to be infill drilled before construction commences Targeting initial plant capacity similar to Inata further construction / development in phase II Total capital outlay +US$250 million Ground breaking early 2013, production start-up 2014 Anticipated Mineral Reserve grade of 2 g/t Au 90% recovery estimated Subject to Mining Code, viable opportunity to develop mine of similar scale to Inata Costs Like for like - slightly higher costs than Inata (power) Lower strip ratio anticipated Page 19

20 PRODUCTION GROWTH Annual production (oz.) 600, , , , , ,000 Inata Inata expansion (phase 1) Inata expansion (phase 2) Koulekoun, Guinea 250,000 + Start-up Start-up 80,000 Start-up 80,000 80, , , , , , On track to exceed production of 500,000 oz by 2015 Page 20

21 AVOCET MINING 1 Established production base of ± 160,000 oz. pa at Inata 2 Expansion of Inata Mine to minimum of 240,000 oz. 3 Development of existing resource at Koulékoun to 250,000 oz. pa mine 4 Driven by strong management team with extensive local and global experience 5 Achieved with strong balance sheet and cash generative earnings Page 21

22 A leading West African gold mining and exploration company Page 22

23 AVOCET MINING HISTORY 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 Divested tungsten operations to focus on gold 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 Disposed of Tajikistan gold operations ZGC Acquisition of the Seruyung gold exploration project in Kalimantan, Indonesia Acquired Wega Mining and the Inata gold project, Burkina Faso - Poured first gold at Inata Mine 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 Listed on Main Market of LSE - Market capitalisation of 434m - On track to enter FTSE250 in 2012 Page 23

24 MINERAL RESOURCES AND RESERVES: INATA Ore Reserves and Mineral Resources as at 31 December 2011 Gross Net attributable (90%) Tonnes (Mt) Grade (g/t) Contained ounces Tonnes (Mt) Grade (g/t) Contained ounces Mineral Reserves Proven 16,091, ,000 14,482, ,000 Probable 17,234, ,000 15,510, ,000 ROM Stockpiles 497, , , ,000 Reserves total 33,822, ,848,000 30,440, ,663,000 Mineral Resources Measured 17,881, ,800 16,093, ,400 Indicated 39,446, ,712,000 35,501, ,540,800 Measured + Indicated 57,327, ,675,800 51,594, ,408,200 Inferred 17,846, ,100 16,061, ,200 Resources total 75,172, ,455,000 67,655, ,109, Mineral Resources are inclusive of Ore Reserves and reported above 0.5g/t gold cut off. The Mineral Resource was estimated by Mr David Williams (MAusIMM) and Mr Sam Beckett (MAusIMM) of CSA Global Pty Ltd, both being Competent Persons as defined by the JORC Code. Mineral resources are reported below the 31 December 2011 topographic surface. 2. The Ore Reserves are estimated by Mr Clayton Reeves (Member SAIIM), Principal Mining Consultant, CSA Global (UK), and is a Competent Person as defined by the JORC Code. 3. Rounding errors may occur. Page 24

25 MINERAL RESOURCES AND RESERVES: SOUMA Mineral resource estimate as at 31 October 2010 Gross Net attributable (100%) 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 320, , , ,500 Measured + Indicated 320, , , ,500 Inferred 10,380, ,600 10,380, ,600 Resources total 10,700, ,100 10,700, , Mineral Resources are inclusive of Ore Reserves and reported above 0.2g/t gold cut off. The Mineral Resource was estimated by Mr David Williams (MAusIMM) of CSA, a Competent Person as defined by the JORC Code Mineral resources are reported below the topographic surface. Rounding errors may occur. Page 25

26 MINERAL RESOURCES AND RESERVES: TRI-K Mineral Resources as at 20 December 2011 Gross Net attributable (100%) 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, ,000,800 21,610, ,000,800 Measured + Indicated 21,610, ,000,800 21,610, ,000,800 Inferred 22,600, ,200 22,600, ,200 Kodiéran Inferred 7,260, ,100 7,260, ,100 Resources total 51,470, ,244,100 2,244, ,244, The resource has been estimated within constraining wireframe solids based on a nominal lower cut off grade of 0.3 g/t Au. The resource is quoted from blocks above 0.5 g/t Au. The Company owns 100% of Wega Mining Guinée, owner of the Koulékoun gold project and Kodiéran prospect. Resources are reported above 0.5g/t gold cut off. The Koulekoun Mineral Resource was estimated by Mr David Williams (MAusIMM), Principal Consultant, CSA Global Pty Ltd. The Kordieran Mineral Resource was estimated by Mr John Milovanovic (FAusIMM), Chief Resource Geologist for Avocet. Both are Competent Persons as defined by the JORC Code. 2. Note: rounding errors may occur. Page 26