Gold Hedge Position

    RNS Number : 4785B
  Avocet Mining PLC
  18 August 2008
   

    SIGNIFICANT REDUCTION IN HEDGE POSITION
    - INCREASED EXPOSURE TO LONG TERM SPOT PRICES

    Avocet Mining PLC ("Avocet" or "the Company") announces that it has taken advantage of the recent fall in the gold price to increase its
exposure to spot gold prices through a significant reduction in its gold collar hedge position. On 15 August the Company completed the
buy-back of sold call options over 65,000 ounces of gold with an exercise price of US$755/oz, representing a reduction of 34% from the
previous gold collar position. The cost of the buy-back transaction was US$10.8 million.  

    As outlined at its year end results presentation, the Company's strategy is to sell gold at spot prices or better. The reduction in the
hedge position announced today means that all gold sales will be at spot prices (or US$600/oz if higher) until at least June 2010. 

    Avocet views the recent fall in the gold price as an appropriate opportunity to reduce its hedge position and increase future spot
exposure. The Company will continue to monitor closely fluctuations in the gold price as part of its ongoing active management of capital
resources. 

    Jonathan Henry, Chief Executive Officer, commented:

    "This transaction reflects our strategy of being exposed to the upside in gold prices, while ensuring that sufficient cash resources
will be available to support our organic and acquisition growth aspirations, at a time when many mining companies with development projects
are encountering constraints on financing."  

    For further information please contact:

 Avocet Mining PLC               Buchanan              Ambrian Partners Limited       JPMorgan Cazenove
                                 Communications
 Jonathan Henry, Chief           Financial PR          NOMAD and Joint Broker         Lead Broker
 Executive Officer               Consultants           Richard Brown                  Michael
 Mike Norris, Finance Director   Bobby Morse           Richard Greenfield             Wentworth-Stanley
 020 7907 9000                   Robin Haddrill        020 7634 4700                  Sam Critchlow
 www.avocet.co.uk                020 7466 5000         www.ambrian.com                020 7588 2828 
                                 www.buchanan.uk.com                                  www.
                                                                                      jpmorgancazenove.
                                                                                      com

    1 - This transaction means that the Company now has purchased put options over 360,000 ounces at a strike price of US$600/oz,
exercisable from now until July 2011, and sold call options over 125,000 ounces at a strike price of US$755/oz, exercisable between July
2010 and July 2011. Previously the Company had sold call options over 190,000 ounces at US$755/oz, exercisable between January 2010 and July
2011. All put options remain in place, as downside protection.

    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.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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