Avocet Mining 2013 Full Year Results 6 th March 2014 Page 1
Quality assets in a highly prospective region Inata Gold Mine o o o Producing mine with significant exploration potential Cash generative asset even at lower gold prices Upside from satellite Souma deposit 20km from Inata process plant currently 0.8Moz with significant growth potential o Inata Mineral Resources of 5.5 Moz., including 0.8 Moz. at Souma Tri-K Development Project o Feasibility study results announced in Q4 2013 o Potential to be Guinea s next producing gold mine - first under new mining code o Low capex development plan assumes initial heap leach project Page 2
Summary: 2013 Inata production of 118,443 ounces at a total cash cost of US$1,203/oz Carbon blinding circuit - online H2 2014 Now a fully unhedged gold producer Completion of Tri-K feasibility study, including maiden Ore Reserve Baseline studies commenced at Souma ahead of mining licence application Business Review considering options for maximising the value of assets 2,000.00 1,900.00 1,800.00 1,700.00 1,600.00 1,500.00 1,400.00 1,300.00 1,200.00 1,100.00 1,000.00 Gold price 2012-2013; 2013 represented biggest one year drop in 13 years Business increasingly well placed for low gold price environment Page 3
Business Review Page 4
Business Review Review announced on 20 th December to consider options for maximising the value of the Company s assets for the benefit of shareholders Key objectives of Business Review include - Ensure Inata mine is adequately funded - Address repayment of Elliott loan Discussions ongoing with a number of parties Company will provide further updates as appropriate Process under way to address funding issues Page 5
Operational review Inata Gold Mine Page 6
Inata gold mine Located in Northern Burkina Faso Production since 2009 Open pit mining methods, mined 33.2 million tonnes in 2013 Mining along Inata and Minfo trends Mining licence expanded 50% to include new area Filio Resources increased to over 6 million ounces Life of mine plan updated to be based on lower gold price of US$950/oz Sayouba pit Inata North pit Inata processing plant Inata Central pit Aerial view showing Inata layout Minfo pit Refocused on smaller pit shells and cash generation Page 7
Updated Mineral Resources Mineral Resources in Bélahouro district increased to 6.1 million ounces, comprising: - Inata Mining Licence expanded to 39km 2 now includes Filio - Resource within mining licence now increased to 5 million ounces - Inata Surrounds (Pali, Ouzeni) 310,000 ounces - Souma increased by 12% to 822,000 ounces, with 32% increase in M&I as resources are upgraded Group Mineral Resources increased to 9.1 million ounces - Includes Tri-K Mineral Resource of 3 million ounces Group Mineral Resources grown to 9 million ounces Page 8
2013: full year production Full year production of 118,443 ounces Production 8% lower in H2 2013 vs H1 2013 as result of: - Lower mining volumes (-31%) as a result of equipment down time and pit slope failures - Process plant throughput rates (- 10%) reduced due to reduced SAG mill throughput and power generation Low grade material processed ahead of carbon blinding circuit commissioning in Q2 2014 - Construction commenced Q1 2014 H1 2013 H2 2013 Ore mined (k tonnes) 1,788 1,326 Waste mined (k tonnes) 17,827 12,273 Total mined (k tonnes) 19,614 13,599 Ore processed (k tonnes) 1,236 1,117 Average head grade (g/t) 1.75 1.75 Process recovery rate 85% 88% Gold Produced (oz) 61,726 56,717 Cash costs (US$/oz) Mining 521 531 Processing 366 380 Administration 176 200 Royalties 100 91 1,204 1,201 Addressing underperformance with new LOM focussed on cash generation Page 9
Improving mining fleet availability Inata s mining fleet comprises 6 excavators and 2 front end loader, 17 haul trucks and ancillary equipment such as drill rigs, dozers, graders Equipment downtime in Q4 reduced average tonnages mined in November and December to 71kt and 68kt respectively - CAT 993 suffered a fire and then drive shaft failure. 3 trucks suffered transmission failures Maintenance processes being improved Based on smaller pit shells, mining rate likely to be in region of 55,000-60,000 tonnes per day - Contract mining being considered to deliver higher reliability of equipment and reduce capital expenditure decision likely in Q2 2014 Smaller pits will require lower mining rates Page 10
Addressing processing plant performance Throughput capacity c.2mt p.a. (higher in oxide ore) Consistent processing rates in H1; reduced throughput in H2 as result of: - Generator failures in December; - Vibrations on the SAG mill require mill to be run below capacity until plant shutdown. - Shutdown planned in phased approach during H1 to fix vibrations and upgrade mill motor - First phase of shutdown (1 week) planned for March. Remaining 2-3 weeks of shutdown in Q2 Plant throughput to improve following phased SAG mill shutdown in H1 2014 Page 11
Carbon blinding circuit: new process flow Ore feed from existing grinding circuit Cyclones Blinding additional tanks Cyanide Tailings Key: Flow of material Existing plant Additional equipment - carbon blinding circuit Additional regen. capacity CIL tanks Elution circuit Additional CIL tank Simple project with little or no disruption to operations during construction Page 12
Carbon blinding circuit: online H2 2014 New carbon blinding circuit will achieve higher recoveries - Carbon blinding refers to negating effects of organic carbon in certain ore types - Higher recovery rates equate to additional ounces of gold production during LOM - High grade ore previously excluded from LOMP due to high PRI is now economic - Circuit enables high grade carbonaceous ore to be processed as mined, rather than stockpiled for later treatment, as has been necessary to date Blinding circuit is a simple project with estimated capex of US$6m, in contrast to previous estimates for a more complex solution - Capex will be met from Inata s own cash generation - Construction is well under way and all major parts have been ordered Inata plant will continue processing lower grade benign oxide material until carbon blinding circuit is complete scheduled by mid-2014 Civils contractor appointed Low capex solution of US$6m funded from Inata operating cash flow Page 13
2014: Inata outlook Q1 2014: - Lower grades pending CBC commissioning - Throughput impacted by plant remediation - First phase of SAG mill shutdown to be conducted during March, to be completed in 1 week; remaining 2-3 weeks of shutdown to be completed in Q2 Inata life of mine plan - Estimated life of mine plan provided in 20 th December press release - Updated life of mine plan to be announced with Q1 results on 8 th May - Production guidance for 2014 to be provided alongside updated life of mine plan Inata remediation continues Page 14
Souma added to Inata LOM plan Souma project added to Inata life of mine plan as satellite ore source Mineral Resource estimate increased to 822,000 ounces - Includes 32% increase in Measured and Indicated ounces following infill drilling programme in 2013 Benign metallurgy no carbonaceous ore types and amenable to standard CIL processing techniques Mining licence application process commenced - Baseline studies underway - Initial pit shells completed on existing resource Plan is to construct 20km haul road between Souma and Inata processing plant and truck ore Production expected in 2015 Inata to benefit from cash generation from Souma ore in 2015 Page 15
Development review Tri-K Project, Guinea Page 16
Tri-K feasibility study Details of feasibility announced October 2013 - Maiden Ore Reserve of 7.9 Mt @ 1.89 g/t Au (480,000 oz.) - Life of mine strip ratio of 2.6-1.2 million tonne p.a. heap leach plant with 7 year mine life - Average gold recoveries of 80% - Average annual production of 55,000 oz. Heap leach project will target oxide portion of Orebody - Approximately 0.6Moz estimated to be amenable to heap leach - Exploitation of 2.4 Moz contained in fresh material to be considered through CIL Potential to be Guinea s first mine under the new mining code Page 17
Tri-K licence approval process Exploration licences consolidated into 5 new licences over the existing project area - Exploitation permit application made over footprint of Ore Reserve areas Koulékoun and Kodiéran ESIA and Feasibility Study presented to Guinea government in July 2013 - Final submission in October 2013 - ESIA has now been approved National Commission of Mines convened by Guinea authorities to review Tri- K application which has approved the Feasibility Study - Grant of Exploitation Permit expected shortly Exploitation of 2.4 Moz contained in fresh material to be considered through CIL Business Review process ongoing to review funding options for development following grant of permit Process remains on track; development options under review Page 18
Financial review Page 19
Income continuing operations 2013 US$ million 2013 2012 Revenue 149.2 204.1 Cost of sales (179.6) (168.7) Gross (loss)/profit (30.4) 35.4 Administrative & finance items (15.6) (17.1) (Loss)/profit before exceptionals (46.0) 18.3 Exceptional items - Net impairment of assets (40.7) (135.3) - Net impact of hedge (62.7) - Profit/(loss) before taxation (149.4) (117.0) EBITDA (10.5) 48.4 Results mainly affected by a US$54.8m fall in revenue lower production (US$23.3m) and lower realised prices (US$31.5m, including higher number of ounces sold into the hedge) Cost of sales reflect mining and processing costs higher by $9.1m and $2.3m respectively Impairments comprise Burkina Faso $30.5m, Guinea $7.3m, and other impairments of $2.9m, mainly reflecting lower gold price and changes in Inata estimated life of mine plan Net impact of hedge represents the partial buy back and restructure cost of US$20.2m and the final settlement of the forward contracts of US$42.4m. Final settlement cost reflects US$96.6m loss on initial recognition of hedge liability in March less US$54.2m reduction in liability between March and November resulting from hedge deliveries & lower spot prices Page 20
Cash flow statement 2013 US$ million 2013 2012 EBITDA (10.5) 48.3 Working capital (1.8) 0.3 Hedge restructure and settlement (62.6) - Interst paid (1.8) (1.0) Tax paid (3.5) - Provision/other 1.5 4.8 Net cash (used in)/generated by operating activities (78.7) 52.4 Capex (15.7) (35.1) Exploration (14.5) (31.8) Loan proceeds 77.8 - Debt payments (6.8) (24.0) Dividend - (13.2) Other cash movement (1.8) 1.4 Total decrease in cash (39.7) (50.3) Opening cash 54.9 105.2 Closing cash 15.2 54.9 Operating cash flow impacted by lower production, fall in gold prices and hedge buy backs 2013 capex includes - US$5.9m mining equipment and rebuilds - US$6.1m tailings facility Debt repayments comprise US$5.0m final repayment of Macquarie loan, and $1.8m principal repayments on Ecobank loan Loan proceeds comprise US$15.0m Elliott loan draw down in March and US$62.8m Ecobank draw down in October Loan balances outstanding (76.5) (5.0) Closing net (debt)/cash (61.3) 49.9 Page 21
Cash costs 2013 96 Production variances increased cash costs by US$96/oz., with lower tonnes treated and grades partially offset by gold in circuit changes year on year Mining and Processing cost accounted for US$77/oz. and US$48/oz. of the increase respectively Royalty costs decreased the cash costs by US$21/oz. due to lower gold prices Page 22
Mining and processing costs 2013 Mining costs Processing costs US$/t US$/t 2.00 20.00 1.60 16.00 1.20 0.80 1.95 1.68 12.00 8.00 18.75 16.34 0.40 4.00 - - 2013 2012 2013 2012 Tonnes mined 33.2m 33.1m Tonnes processed 2.35m 2.56m Mining costs up 16% on approximately the same tonnes mined Higher maintenance, fuel and explosive costs account for the majority of the increase in cost per tonne Processing costs up 6% on 8% fewer tonnes processed Higher maintenance, fuel and reagent costs account for the majority of the increase in cost per tonne Page 23
2014 outlook Complete Business Review Refocus Inata on cash generation through mining smaller pit shells Complete construction of carbon blanking circuit Submit Souma mining permit application Page 24
Avocet Mining a West African focused gold mining and exploration company Page 25
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