TIDMAVM
RNS Number : 0091R
Avocet Mining PLC
28 October 2011
AVOCET MINING PLC
RESULTS FOR QUARTER ENDED 30 SEPTEMBER 2011
Strategic highlights
-- Completion of further asset disposals in South East Asia;
US$197 million of total US$200 million consideration now
received
-- Production and exploration activities now exclusively focused in West Africa
-- Scoping study progressing for Inata expansion to between
245,000 and 330,000 ounces - results in Q1 2012
-- Intention to move to a premium listing on the Official List
of the Main Market of the London Stock Exchange
Operational highlights
-- Q3 2011 gold production at Inata of 33,256 ounces at a cash
cost of US$830 per ounce, compared with 39,423 ounces at a cash
cost of US$677 per ounce in Q2 2011
-- Production in Q3 affected by a SAG mill drive motor failure
and by a short period of processing a higher proportion of
transitional carbonaceous ore - Q4 production expected at or above
40,000 ounces
-- Cost increase mainly reflects lower production in the quarter
as well as higher fuel prices and increase in national labour
costs
-- Increase in Inata Mineral Resources to 3.36 million ounces,
and Mineral Reserves at Inata to 1.46 million ounces
-- Increase in Mineral Resources at Koulekoun to 1.47 million ounces
-- Total West African Resource base currently at 5.4 million,
more than doubled from 2.4 million at acquisition in 2009
Financial highlights
-- EBITDA from continuing operations of US$15.0 million in Q3
2011 compared with US$16.6 million in Q2 2011
-- Cash balance at the end of Q3 2011 of US$120.4 million
-- Hedge buy back of US$39.8 million; full effect of
restructuring on realised gold price in Q4 2011
-- First interim dividend of US$6.5 million (equivalent to 2.1p
per share) paid to shareholders in the period
Brett Richards, Chief Executive Officer, commented:
"Over the quarter Avocet continued its stated strategy of
aggressively growing its asset base in West Africa, with
significant resource increases in Burkina Faso and Guinea, as well
as reserves at Inata. The disposal of our South East Asian assets
is substantively complete, with US$197 million received to date
that will be deployed in maintaining our growth in West Africa. We
also announced today our decision to move to a premium listing on
the Official List of the Main Market of the London Stock Exchange,
a natural progression for what is today a sizeable, dividend paying
gold producing and exploration company, and one that should enhance
shareholder value.
Operationally, Inata is again producing at planned levels and we
expect production to revert to a level at or above 40,000 ounces in
the fourth quarter of the year."
A webcast presentation of these results will be available at
www.avocetmining.com from 10.00 BST today.
For further information please contact:
Avocet Mining Buchanan Ambrian Partners J.P. Morgan Arctic Securities SEB Enskilda
PLC Limited Cazenove
Financial NOMAD & Joint Lead Broker Financial Market Maker
PR Consultants Broker Adviser
& Market
Maker
Brett Richards, Bobby Morse Samantha Harrison Michael Arne Wenger Fredrik Cappelen
CEO James Strong Jen Boorer Wentworth-Stanley Petter Bakken
Mike Norris, Neil Passmore
FD
Angela Parr,
IR
+44 20 7466
5000
+44 20 7766 +44 78 7260 +44 20 7634 +44 20 7588 +47 2101 +47 2100
7674 4783 4700 2828 3100 8500
================== ================ ================== ===================== ================== =================
Notes to Editors
Avocet Mining PLC ("Avocet" or "the Company") is a gold mining
and exploration company listed on the AIM market of the London
Stock Exchange (Ticker: AVM.L) and the Oslo Bors (Ticker: AVM.OL).
Avocet announced today its decision to move to the Official List of
the Main Board of the London Stock Exchange. The Company's
principal activities are gold mining and exploration in Burkina
Faso (as 90 per cent owner of the Inata gold mine and 100 per cent
owner of 8 exploration licences in the Belahouro region surrounding
Inata) and exploration in Guinea.
In December 2010 Avocet announced that it had signed a binding
agreement for the conditional sale of its South East Asian assets
to J&Partners L.P., a private company, for US$200 million. To
date US$197 million of the total consideration has been
received.
The substantial completion of this transaction has left Avocet
as a West African gold producer and explorer, with a clear strategy
for growth in that region.
The Inata deposit presently comprises a Mineral Resource of 3.36
million ounces and a Mineral Reserve of 1.46 million ounces. Inata
poured its first gold in December 2009. Other assets in West Africa
include exploration permits in Burkina Faso (the most advanced
prospect within Belahouro being the Souma trend, some 20 kilometres
from Inata, with a Mineral Resource of 0.56 million ounces), Guinea
(the most advanced being Koulekoun with a Mineral Resource of 1.47
million ounces) and Mali.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Strategic Review
Avocet has made further progress towards fulfilling its
objective of becoming a leading West African gold mining and
exploration company.
At Inata, the scoping study to expand production is progressing.
The study will review the benefits of expansions in gold production
to between 245,000 and 330,000 ounces including the positive impact
this will have on unit cash costs. The study will consider how best
to exploit the targeted reserve and the potential upside from
resources in the Belahouro region. The Company expects this
expanded study to be completed in Q1 2012.
In Guinea, the growth of resources at Koulekoun has continued
with a further increase announced today. Metallurgical test work is
on-going, while government relations work also continues in order
to better understand the impact of the new Mining Code on our
intention to develop a large regional operation. All of these
efforts will support Koulekoun's progress towards a definitive
feasibility study in 2012.
The Inata hedge book was restructured during the period and the
last deliveries into the old hedge structure were made in July. A
one-off cost is reflected in the Q3 2011 earnings, being the cost
of the 20 per cent of hedged ounces bought back in July. From Q4
onwards, 80 per cent of all sales will be at spot prices.
During the quarter, the Company paid its first dividend,
following the adoption of a new dividend policy announced in
July.
In view of these strategic developments, the Board has taken the
decision, in the interest of the Company and its shareholders to
move the trading of the Company's shares from the Alternative
Investment Market ("AIM") to the Main Market of the London Stock
Exchange ("LSE"). The Company intends to seek admission to the
Official List and to trade on the premium segment of the Main
Market of the LSE in the near future.
Update on South East Asia Asset Sale
The disposal of the Company's South East Asian assets is
virtually complete, with a further US$27 million of proceeds
received in September 2011. A total of US$197 million has now been
received out of the US$200 million total proceeds. Completion of
the sale of the last two exploration assets remains subject to
local approvals, while working capital adjustments also remain
outstanding in respect of those entities already disposed of. In
September, the Company received a notice from the South Jakarta
District Court, summoning it to appear before this court during
November 2011 as the defendant to a claim brought by PT Lebong
Tandai. The summons contained no details of the claim and Avocet
believes that any claim would be baseless, and will defend itself
vigorously.
Operational Review
The gold price performed strongly during the quarter, peaking at
an all-time high of US$1,900 per ounce, and closing at US$1,625 per
ounce.
Gold production in the quarter totaled 33,256 ounces compared
with 39,423 ounces in Q2 2011. All gold produced in the quarter was
from the Inata mine, as the sale of Avocet's South East Asian mines
completed 24 June 2011. Production from Inata was lower than the
previous quarter due to a mill outage in July combined with the
impact of a short period of processing higher levels of
carbonaceous material from the bottom of the Inata North starter
pit.
Inata Mine 2010 2011
============================== =========================================== ====================
Q1 Q2 Q3 Q4 Q1 Q2 Q3
============================== ======= ======= ======= ======= ======= ======= ===========
Production statistics(1)
Ore mined (000's tonnes) 342 418 481 638 618 634 580
Waste mined (000's tonnes) 2,005 2,437 2,619 4,369 4,673 3,804 6,211
Ore and waste mined (000's
tonnes) 2,347 2,855 3,100 5,007 5,291 4,438 6,791
Ore processed (000's tonnes) 228 389 549 593 645 586 585
Average ore head grade
(g/t Au) 2.80 2.87 2.43 2.68 2.37 2.24 2.18
Process recovery rate 94% 95% 94% 94% 94% 93% 89%
============================== ======= ======= ======= ======= ======= ======= ===========
Gold produced (ounces) 19,838 31,225 40,461 46,208 47,963 39,423 33,256
============================== ======= ======= ======= ======= ======= ======= ===========
Cash costs (US$/oz)(1)
- mining - 147 114 132 136 200 255
- processing - 211 211 209 205 238 301
- royalties and overheads - 211 201 170 192 239 274
============================== ======= ======= ======= ======= ======= ======= ===========
Total cash cost - 569 526 511 533 677 830
============================== ======= ======= ======= ======= ======= ======= ===========
(1) Production statistics include figures for Q1 2010; however
cash costs are excluded for Q1 2010, as Inata did not reach
commercial production until 1 April 2010.
While milling throughput of 585,000 tonnes was in line with Q2
2011, a SAG mill drive motor failure in July resulted in a ten day
outage, and ore processed for Q3 2011 was therefore below
expectation.
With the Inata Central pit only starting to contribute ore in
the middle of the quarter, a higher than usual proportion of the
ore processed during the quarter was sourced from mining at depth
in the Inata North pit. This ore contains zones of fresh
carbonaceous material that resulted in preg-robbing, reducing the
recovery rate from 93 per cent in Q2 2011 to 89 per cent in Q3. By
the end of the quarter, ore was being sourced primarily from the
Inata Central pit, with the result that a lower proportion of ore
will be sourced at depth in Inata North during the fourth quarter
of 2011. Recoveries in the fourth quarter are therefore expected to
improve towards the levels achieved in Q2 2011.
Mining activities focused on the Inata North and Central pits. A
programme of maintenance work led to improvements in equipment
availability, while the final units of third mining fleet were
commissioned during the quarter. As anticipated, the stripping
ratio increased to 10.7 in Q3 2011 compared with 6.0 in the
previous quarter. As a result, total tonnages mined increased by 53
per cent compared with the previous quarter.
The third quarter saw continued increases in input costs
throughout the mining sector. Inata's cost per ounce increased from
US$677 per ounce in Q2 to US$830 per ounce in Q3. Approximately 80
per cent of the increase was a function of lower gold production,
with the remainder principally reflecting higher tonnes mined and
higher fuel costs. Following the government's decision during Q3
2011 to enforce irrecoverable VAT at 18 per cent, the Q3 2011 cost
included a VAT charge in respect of the Q2 2011. In addition,
national labour costs were higher following the wage settlement
agreed during the Q2 2011. The increase in mining volumes meant
that mining cost per tonne fell from US$1.78 in the Q2 2011 to
US$1.25 in the Q3 2011. Mining costs in the fourth quarter are
expected to be approximately US$1.50 per tonne.
Gold production in the fourth quarter is expected to be at or
above 40,000 ounces at a cash cost of US$775 to US$825 per ounce,
for a full year total of between 160,000 and 165,000 ounces at
US$700 to US$725 per ounce.
The third quarter marks the rainy season in West Africa, and a
break in the Company's drilling campaigns in Burkina Faso and
Guinea. Focus in the period was therefore on analysis of drill
results and the estimation of Mineral Resources and Mineral
Reserves. Significant increases in Mineral Resources and Reserves
at Inata were announced in the quarter, and a further increase in
Mineral Resources at Koulekoun in Guinea was announced today.
Avocet's total Mineral Resources in West Africa have now more than
doubled from 2.36 million ounces at the time of the Company's
acquisition of these assets in 2009, to 5.39 million ounces.
In August the Company announced an upgrade of the Mineral
Resource for the Inata mine license area to 3.36 million ounces
above a 0.5 g/t Au and beneath the 30 June 2011 topographic
surface. This represented an increase of 1.24 million ounces, or 59
per cent, over the previously published Mineral Resource of 2.12
million ounces and an increase of 1.53 million ounces or 83 per
cent, after taking into account depletion of the resource due to
mining, since the drilling programme commenced in October 2010.
Following this update in Inata's Mineral Resources, the Company
undertook an analysis of economic factors and pit designs and in
October announced a 40 per cent increase in Mineral Reserves to
1.46 million ounces. This reserve was based on 23.6 million tonnes
of ore at an average grade of 1.93 g/t Au. Cash costs of US$1.50
per tonne for mining, US$22.74 per tonne for processing and
administration, and a gold price of US$1,200 per ounce were assumed
in determining this reserve.
Based on current production levels, the increased Mineral
Reserve represents an extension of the Life of Mine to
approximately 2020. This extension supports the Company's objective
of increasing processing capacity at the Inata Mine, and a scoping
study in this regard is underway, the results of which are expected
in Q1 2012.
A further update to the Inata Mineral Resource is expected by
the end of 2011 following completion of additional drilling in the
fourth quarter of 2011 and the inclusion of approximately 16,000
assays from the 2010-2011 drilling programme that were not received
at the time of the latest Mineral Resource update. A further update
on the Inata Mineral Reserve is expected in Q1 2012, when the
Company's target of 1.8 million ounces is expected to be
reached.
Exploration in Guinea continued in the quarter with a three
dimensional model of geology and mineralisation at Koulekoun being
completed in August 2011. Today, the Company also announced an
increase in Mineral Resources at Koulekoun to 1.47 million ounces,
representing an increase of 34 per cent on the previous resource of
1.1 million ounces announced in May 2011 and an increase of 121 per
cent since Avocet commenced exploration in 2010. This brings the
Company closer to achieving its target of 2 million ounces at Tri-K
by year end. The Company intends to progress Koulekoun to a
definitive feasibility study in 2012.
Ongoing drilling in the Kodieran District yielded positive
results that were announced in October and demonstrate the
prospective nature of this district and highlight the exploration
and development potential of the greater Tri-K region.
Group Reserves and Gross Net attributable
Resources
Tonnes Grade Contained Tonnes Grade Contained
(g/t) Ounces (g/t) Ounces
Mineral Reserves
(pit)
Proven 14,468,000 1.92 891,000 13,021,000 1.92 801,900
Probable 8,596,000 1.98 547,600 7,736,000 1.98 492,800
ROM Stockpiles
Proven 494,000 1.50 23,900 445,000 1.50 21,500
Reserves Total 23,558,000 1.93 1,462,500 21,202,000 1.93 1,316,200
Mineral Resources
Measured 17,672,000 1.72 979,600 15,905,000 1.72 881,600
Indicated 57,151,000 1.37 2,521,400 53,541,000 1.37 2,365,200
Measured + Indicated 74,822,000 1.46 3,501,000 69,445,000 1.45 3,246,900
Inferred 41,923,000 1.41 1,895,100 40,157,000 1.41 1,812,800
Resources Total 116,745,000 1.44 5,396,100 109,602,000 1.44 5,059,700
Note: Rounding errors may exist.
Financial Review
Since the signing on 24 December 2010 of the conditional
agreement to sell the Group's assets in South East Asia, the
operating results of these assets have been presented in the
consolidated income statement as discontinued operations for the
current and comparative periods. Those assets and liabilities that
remained within the Group at 30 September 2011 have been presented
separately as a disposal group in the statement of financial
position at each balance sheet date. This is as required by
International Financial Reporting Standards (IFRS). A detailed
analysis of the results, assets, and cash flows of the disposal
group is presented in the segmental information.
Quarter ended Quarter ended Quarter ended Quarter ended
30 June 30 June 30 September 30 September
2010 2011 2010 2011
Unaudited Unaudited Unaudited Unaudited
============================== ============== ============== ============== ==============
Total gold production
(ounces) 52,870 62,803 67,792 33,256
============================== ============== ============== ============== ==============
Average realised gold
price (US$/oz) 1,203 1,292 1,139 1,316
============================== ============== ============== ============== ==============
Cash production costs
(US$/oz) 701 802 619 830
============================== ============== ============== ============== ==============
EBITDA(1) from continuing
operations (US$000) 18,297 16,600 18,018 14,952
============================== ============== ============== ============== ==============
EBITDA from continuing
and discontinued operations
(US$000) 24,559 26,083 27,860 14,013
============================== ============== ============== ============== ==============
Profit/(loss) before tax
from continuing operations
(US$000)(2.) 7,765 14,862 5,867 (33,540)
============================== ============== ============== ============== ==============
Profit before tax from
continuing and discontinued
operations (US$000) 10,900 96,973 13,308 (19,064)
============================== ============== ============== ============== ==============
(1.) EBITDA represents earnings before exceptional items,
finance items, tax, depreciation and amortisation. EBITDA is not
defined by IFRS but is commonly used as an indication of underlying
cash generation.
(2.) Loss for quarter ended 30 September 2011 includes hedge buy
back cost of US$39.8 million.
The financial review table above reflects the production and
earnings of both the continuing and discontinued operations in the
comparative period. A like for like analysis of comparative results
from continuing operations is provided for further insight.
Revenue from continuing operations was slightly down in Q3 at
US$42.4 million compared with US$44.7 million in Q2 2011, as lower
gold produced and sold offset the benefit of higher spot prices on
unhedged sales. The percentage of gold sold into the hedge over the
period was almost 50 per cent, as the old hedge structure continued
into Q3 2011.
Mining and processing costs increased on a per ounce of
production basis for reasons outlined above. Overhead costs in
Burkina Faso were in line with the prior period but Group
administration charges were notably reduced from the prior
period.
Resulting EBITDA from continuing operations for Q3 was US$15.0
million compared with US$18.3 million in Q3 2010.
The Group reported a loss before tax from continuing operations
for the quarter of US$33.5 million compared with a profit of US$5.9
million in the quarter ended 30 September 2010 and US$14.9 million
in the Q2 2011. The third quarter results included an exceptional
charge of US$39.8 million related to the hedge restructure.
Net cash generated by continuing operations during Q3 was US$3.2
million compared with cash generated from continuing operations of
US$17.5 million in Q3 2010 and US$4.5 million in the Q2 2011. Other
cash flows during Q3 2011 included capital expenditure at Inata of
US$18.6 million, exploration investment of US$2.8 million in West
Africa, and debt repayments of US$6.0 million. The Group had
US$120.4 million of cash at the end of the quarter and debt of
US$35.0 million.
BRETT A. RICHARDS
Chief Executive Officer
CONDENSED CONSOLIDATED INCOME STATEMENT
For the three months ended 30 September 2011
Three months ended 30 September Three months ended 30
2011 September 2010
Unaudited Unaudited
Note Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
=========================== ===== ============ ============= ========= ============ ============= =========
US$000 US$000 US$000 US$000 US$000 US$000
Revenue 3 42,413 - 42,413 44,299 33,190 77,489
Cost of sales 3 (32,567) (939) (33,506) (34,535) (26,058) (60,593)
=========================== ===== ============ ============= ========= ============ ============= =========
Gross profit/(loss) 9,846 (939) 8,907 9,764 7,132 16,896
=========================== ===== ============ ============= ========= ============ ============= =========
Administrative expenses (2,295) - (2,295) (2,363) - (2,363)
Share based payments (387) - (387) (312) - (312)
=========================== ===== ============ ============= ========= ============ ============= =========
Profit/(loss) from
operations 7,164 (939) 6,225 7,089 7,132 14,221
=========================== ===== ============ ============= ========= ============ ============= =========
Profit on disposal
of investments 2,11 - 2,427 2,427 - - -
Profit on disposal
of subsidiaries 2,11 - 12,995 12,995 - - -
Restructure of hedge 8 (39,757) - (39,757) - - -
Finance items
Exchange gains 24 - 24 317 - 317
Finance income 20 - 20 - - -
Finance expense (991) - (991) (1,539) - (1,539)
Net finance items -
discontinued operations - (7) (7) - 309 309
(Loss)/profit before
taxation (33,540) 14,476 (19,064) 5,867 7,441 13,308
=========================== ===== ============ ============= ========= ============ ============= =========
Analysed as:
Profit/(loss) before
taxation and exceptional
items 6,217 (946) 5,271 5,867 7,441 13,308
Exceptional items 11 (39,757) 15,422 (24,335) - - -
=========================== ===== ============ ============= ========= ============ ============= =========
(Loss)/profit before
taxation (33,540) 14,476 (19,064) 5,867 7,441 13,308
=========================== ===== ============ ============= ========= ============ ============= =========
Taxation 7,323 - 7,323 - (452) (452)
(Loss)/profit for the
period (26,217) 14,476 (11,741) 5,867 6,989 12,856
=========================== ===== ============ ============= ========= ============ ============= =========
Attributable to:
Equity shareholders
of the parent company (23,635) 14,518 (9,117) 5,169 6,110 11,279
Non-controlling interest (2,582) (42) (2,624) 698 879 1,577
=========================== ===== ============ ============= ========= ============ ============= =========
(26,217) 14,476 (11,741) 5,867 6,989 12,856
=========================== ===== ============ ============= ========= ============ ============= =========
Earnings per share
Basic (loss)/earnings
per share (cents per
share) 5 (11.87) 7.29 (4.58) 2.63 3.11 5.74
Diluted (loss)/earnings
per share (cents per
share) 5 (11.87) 7.17 (4.58) 2.60 3.07 5.67
EBITDA(1) 14,952 (939) 14,013 18,018 9,842 27,860
=========================== ===== ============ ============= ========= ============ ============= =========
(1) EBITDA represents earnings before exceptional items, finance
items, taxation, depreciation and amortisation. EBITDA is not
defined by IFRS but is commonly used as an indication of underlying
cash generation.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the nine months ended 30 September 2011
Nine months ended 30 September Nine months ended 30
2011 September 2010
Unaudited Unaudited
Note Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
============================= ===== ============ ============= ========== ============ ============= ==========
US$000 US$000 US$000 US$000 US$000 US$000
Revenue 3 142,929 67,236 210,165 80,904 88,639 169,543
Cost of sales 3 (106,055) (51,101) (157,156) (59,666) (74,110) (133,776)
============================= ===== ============ ============= ========== ============ ============= ==========
Gross profit 36,874 16,135 53,009 21,238 14,529 35,767
============================= ===== ============ ============= ========== ============ ============= ==========
Administrative expenses (7,101) - (7,101) (5,184) - (5,184)
Share based payments (1,053) - (1,053) (3,460) - (3,460)
============================= ===== ============ ============= ========== ============ ============= ==========
Profit from operations 28,720 16,135 44,855 12,594 14,529 27,123
============================= ===== ============ ============= ========== ============ ============= ==========
Profit on disposal of
investments 11 8,990 2,427 11,417 1,986 - 1,986
Profit on disposal of
subsidiaries 2,11 - 85,802 85,802 - - -
Restructure of hedge 8,11 (39,757) - (39,757) - - -
Finance items
Exchange losses (58) - (58) 200 - 200
Finance income 20 - 20 - - -
Finance expense (4,023) - (4,023) (2,920) (2,920)
Net finance items -
discontinued
operations - (26) (26) - 378 378
Expenses of listing on
Oslo Bors - - - (2,363) - (2,363)
============================= ===== ============ ============= ========== ============ ============= ==========
(Loss)/profit before
taxation (6,108) 104,338 98,230 9,497 14,907 24,404
============================= ===== ============ ============= ========== ============ ============= ==========
Analysed as:
Profit before taxation
and exceptional items 24,659 16,109 40,768 9,874 14,907 24,781
Exceptional items 11 (30,767) 88,229 57,462 (377) - (377)
============================= ===== ============ ============= ========== ============ ============= ==========
(Loss)/profit before
taxation (6,108) 104,338 98,230 9,497 14,907 24,404
============================= ===== ============ ============= ========== ============ ============= ==========
Taxation 2,721 (2,723) (2) (873) (2,052) (2,925)
(Loss)/profit for the
period (3,387) 101,615 98,228 8,624 12,855 21,479
============================= ===== ============ ============= ========== ============ ============= ==========
Attributable to:
Equity shareholders of
the parent company (2,160) 99,448 97,288 6,819 10,973 17,792
Non-controlling interest (1,227) 2,167 940 1,805 1,882 3,687
============================= ===== ============ ============= ========== ============ ============= ==========
(3,387) 101,615 98,228 8,624 12,855 21,479
============================= ===== ============ ============= ========== ============ ============= ==========
Earnings per share
Basic (loss)/earnings
per share (cents per
share) 5 (1.09) 49.98 48.90 3.49 5.61 9.10
Diluted (loss)/earnings
per share (cents per
share) 5 (1.09) 49.07 48.00 3.46 5.56 9.02
EBITDA(1) 56,955 16,135 73,090 32,172 24,362 56,534
============================= ===== ============ ============= ========== ============ ============= ==========
(1) EBITDA represents earnings before finance items, taxation,
depreciation and amortisation. EBITDA is not defined by IFRS but is
commonly used as an indication of underlying cash generation.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the three months ended 30 September 2011
Three months ended 30 September Three months ended 30
2011 September 2010
Unaudited Unaudited
Continuing Discontinued Continuing Discontinued
Note operations operations Total operations operations Total
======================== ===== ============ ============= ========= ============ ============= ========
US$000 US$000 US$000 US$000 US$000 US$000
(Loss)/profit for
the period (26,217) 14,476 (11,741) 5,867 6,989 12,856
Revaluation of other
financial assets 12 - - - (1,568) - (1,568)
Total comprehensive
income for the period (26,217) 14,476 (11,741) 4,299 6,989 11,288
Attributable to:
Equity holders of
the parent company (23,635) 14,518 (9,117) 3,601 6,110 9,711
Non-controlling
interest (2,582) (42) (2,624) 698 879 1,577
======================== ===== ============ ============= ========= ============ ============= ========
(26,217) 14,476 (11,741) 4,299 6,989 11,288
======================== ===== ============ ============= ========= ============ ============= ========
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the nine months ended 30 September 2011
Nine months ended 30 September Nine months ended 30 September
2011 2010
Unaudited Unaudited
Continuing Discontinued Continuing Discontinued
Note operations operations Total operations operations Total
============================== ===== ============ ============= ======== ============ ============= ========
US$000 US$000 US$000 US$000 US$000 US$000
(Loss)/profit for
the period (3,387) 101,615 98,228 8,624 12,855 21,479
Revaluation of other
financial assets 12 (2,903) - (2,903) (4,631) - (4,631)
Disposal of other
financial assets 11 (9,725) - (9,725) 841 - 841
Reclassification
of foreign exchange
translation reserve
on disposal of subsidiaries 2a (627) - (627) - - -
============================== ===== ============ ============= ======== ============ ============= ========
Total comprehensive
income for the period (16,642) 101,615 84,973 4,834 12,855 17,689
Attributable to:
Equity holders of
the parent company (15,415) 99,448 84,033 3,029 10,973 14,002
Non-controlling
interest (1,227) 2,167 940 1,805 1,882 3,687
============================== ===== ============ ============= ======== ============ ============= ========
(16,642) 101,615 84,973 4,834 12,855 17,689
============================== ===== ============ ============= ======== ============ ============= ========
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2011
30 September 31 December 30 September
2011 2010 2010
Note Unaudited Audited Unaudited
===================================== ===== ============= ============ =============
US$000 US$000 US$000
Non-current assets
Goodwill - - 11,071
Intangible assets 6 32,543 11,091 21,812
Property, plant and equipment 7 252,326 239,979 302,187
Other financial assets 12 2,313 20,293 -
Deferred tax assets 1,459 1,459 5,251
===================================== ===== ============= ============ =============
288,641 272,822 340,321
Current assets
Inventories 40,650 20,379 39,535
Non-current assets held for
sale - - 7,212
Trade and other receivables 22,689 16,157 26,320
Cash and cash equivalents 9 120,373 49,523 46,305
===================================== ===== ============= ============ =============
183,712 86,059 119,372
Assets of disposal group classified
as held for sale 2,3 1,935 125,550 -
Current liabilities
Trade and other payables 45,767 28,430 49,987
Current tax liabilities - - 3,488
Other financial liabilities 8 24,000 24,000 24,000
===================================== ===== ============= ============ =============
69,767 52,430 77,475
Liabilities included in disposal
group held for sale 2,3 - 45,432 -
Non-current liabilities
Other financial liabilities 8 11,000 54,000 60,000
Deferred tax liabilities 6,007 9,593 4,152
Other liabilities 3,737 3,737 18,075
===================================== ===== ============= ============ =============
20,744 67,330 82,227
Net assets 383,777 319,239 299,991
===================================== ===== ============= ============ =============
Equity
Issued share capital 16,247 16,086 16,004
Share premium 149,915 144,571 144,271
Other reserves 15,614 30,632 12,014
Retained earnings 201,772 118,606 118,253
Total equity attributable to
the parent 383,548 309,895 290,542
Non-controlling interest 229 9,344 9,449
===================================== ===== ============= ============ =============
Total equity 383,777 319,239 299,991
===================================== ===== ============= ============ =============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
9 months ended 30 Share Share Other Retained Total Non-controlling Total
September capital premium reserves earnings attributable interest equity
2010 to the
parent
================== ======== ======== ========= ========= ============= ================ ========
US$000 US$000 US$000 US$000 US$000 US$000 US$000
At 31 December
2009
(Audited) 15,904 142,778 11,321 101,611 271,614 5,762 277,376
Profit for the
period - - - 17,792 17,792 3,687 21,479
Revaluation of
other
financial assets - - (4,631) - (4,631) - (4,631)
Disposal of other
financial assets - - 841 - 841 - 841
================== ======== ======== ========= ========= ============= ================ ========
Total
comprehensive
income for the
period - - (3,790) 17,792 14,002 3,687 17,689
================== ======== ======== ========= ========= ============= ================ ========
Share based
payments - - - 761 761 - 761
Transfer between
reserves - - 1,569 (1,569) - - -
Issue of shares 100 1,493 - - 1,593 - 1,593
Loss on issue
from
treasury shares - - - (342) (342) - (342)
Movements on
investments
in treasury and
own shares - - 2,914 - 2,914 - 2,914
================== ======== ======== ========= ========= ============= ================ ========
At 30 September
2010 (Unaudited) 16,004 144,271 12,014 118,253 290,542 9,449 299,991
================== ======== ======== ========= ========= ============= ================ ========
9 months ended 30 Share Share Other Retained Total Non-controlling Total
September capital premium reserves earnings attributable interest equity
2011 to the
parent
================== ======== ======== ========= ========= ============= ================ ========
US$000 US$000 US$000 US$000 US$000 US$000 US$000
At 31 December
2010
(Audited) 16,086 144,571 30,632 118,606 309,895 9,344 319,239
Profit for the
period - - - 97,288 97,288 940 98,228
Revaluation of
other
financial assets - - (2,903) - (2,903) - (2,903)
Disposal of other
financial assets - - (9,725) - (9,725) - (9,725)
Reclassification
of foreign
exchange
translation
reserve
on disposal of
subsidiaries - - (627) - (627) - (627)
================== ======== ======== ========= ========= ============= ================ ========
Total
comprehensive
income for the
period - - (13,255) 97,288 84,033 940 84,973
================== ======== ======== ========= ========= ============= ================ ========
Share based
payments - - - 1,001 1,001 - 1,001
Interim dividend - - - (6,814) (6,814) - (6,814)
Issue of shares
- exercise of
share
options 35 - - - 35 - 35
Issue of shares
- bonuses 75 3,177 - (3,200) 52 - 52
Issue of shares
into EBT 51 2,167 (2,218) - - - -
Purchase of
treasury
shares - - (2,910) - (2,910) - (2,910)
Release of EBT
and
treasury shares - - 1,373 (487) 886 - 886
Net exercise of
share options
settled
in cash - - - (2,630) (2,630) - (2,630)
Non-controlling
interest share
of
dividend from
subsidiary - - - - - (2,000) (2,000)
Disposal of
subsidiaries - - - - - (8,055) (8,055)
Transfer
acquisition
reserve - - 1,992 (1,992) - - -
At 30 September
2011 (Unaudited) 16,247 149,915 15,614 201,772 383,548 229 383,777
================== ======== ======== ========= ========= ============= ================ ========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Nine months ended 30 Nine months ended 30
September 2011 September 2010
(Unaudited) (Unaudited)
Continuing Discontinued Total Continuing Discontinued Total
Note operations operations operations operations
============================= ===== ============ ============= ========= ============ ============= ========
US$000 US$000 US$000 US$000 US$000 US$000
Cash flows from operating
activities
(Loss)/profit for the period (3,387) 101,615 98,228 8,624 12,855 21,479
Adjusted for:
Depreciation of non-current
assets 7 28,235 - 28,235 19,578 9,833 29,411
Share based payments 1,053 - 1,053 3,460 - 3,460
Provisions - 574 574 - 615 615
Taxation in the income
statement (2,721) 2,723 2 873 2,052 2,925
Non-operating items in the
income statement 10 35,066 (88,404) (53,338) 6,038 (325) 5,713
============================= ===== ============ ============= ========= ============ ============= ===========
58,246 16,508 74,754 38,573 25,030 63,603
Movements in working capital
(Increase)/decrease in
inventory (20,270) 341 (19,929) (7,975) (293) (8,268)
(Increase)/decrease in trade
and other receivables (6,102) (745) (6,847) (16,081) 305 (15,776)
Increase/(decrease) in trade
and other payables 2,477 (1,256) 1,221 7,004 (2,816) 4,188
============================= ===== ============ ============= ========= ============ ============= ===========
Net cash generated by
operations 34,351 14,848 49,199 21,521 22,226 43,747
Interest received 20 17 37 - 85 85
Interest paid (2,494) - (2,494) (3,428) (2) (3,430)
Tax (paid)/refunded (865) (3,679) (4,544) - 2,248 2,248
============================= ===== ============ ============= ========= ============ ============= ===========
Net cash generated by
operating
activities 31,012 11,186 42,198 18,093 24,557 42,650
Cash flows from investing
activities
Payments for property, plant
and equipment 7 (40,582) (881) (41,463) (34,488) (2,217) (36,705)
Inata pre-commercial
revenues
capitalised 3 - - - 21,495 - 21,495
Inata pre-commercial costs
capitalised 3 - - - (14,296) - (14,296)
Deferred consideration paid - (1,330) (1,330) - (1,555) (1,555)
Exploration and evaluation
expenses 3,6 (22,027) (2,995) (25,022) (2,843) (3,512) (6,355)
Rehabilitation costs - (393) (393) - - -
Disposal of discontinued
operation, net of cash
disposed
of 2c 177,007 - 177,007 - - -
Net cash received from
disposal
of other investments 11 16,501 - 16,501 - - -
============================= ===== ============ ============= ========= ============ ============= ===========
Net cash generated by/(used
in) investing activities 130,899 (5,599) 125,300 (30,132) (7,284) (37,416)
============================= ===== ============ ============= ========= ============ ============= ===========
Cash flows from financing
activities
Restructure of hedge 8 (39,757) - (39,757) - - -
Expenses of listing on Oslo
Bors 11 - - - (2,363) - (2,363)
Proceeds from issue of
equity
shares 35 - 35 1,883 - 1,883
Loans repaid 8 (43,000) - (43,000) (6,000) - (6,000)
Dividend to equity holders
of the parent company (6,505) - (6,505) - - -
Non-controlling interest
share of dividend from
subsidiary - (2,000) (2,000) - - -
Purchase of treasury shares (2,910) - (2,910) - - -
Settlement of share options (2,471) - (2,471) - - -
============================= ===== ============ ============= ========= ============ ============= ===========
Net cash used in financing
activities (94,608) (2,000) (96,608) (6,480) - (6,480)
============================= ===== ============ ============= ========= ============ ============= ===========
Net cash movement 67,303 3,587 70,890 (18,519) 17,273 (1,246)
Intercompany transfers - - - 15,047 (15,047) -
Exchange gains/(losses) 206 (246) (40) 495 - 495
Transfer of cash not held
for sale 2,3 3,341 (3,341) - - - -
Total increase (decrease)
in cash and cash
equivalents 70,850 - 70,850 (2,977) 2,226 (751)
============================= ===== ============ ============= ========= ============ ============= ===========
Cash and cash equivalents
at start of the period 49,523 - 49,523 29,464 17,592 47,056
============================= ===== ============ ============= ========= ============ ============= ===========
Cash and cash equivalents
at end of period 120,373 - 120,373 26,487 19,818 46,305
============================= ===== ============ ============= ========= ============ ============= ===========
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Preparation
The condensed consolidated interim financial statements, which
are unaudited, have been prepared in accordance with the
requirements of International Accounting Standard 34 as adopted for
use in the European Union. This condensed interim report does not
include all the notes of the type normally included in an annual
financial report. Accordingly, this condensed report is to be read
in conjunction with the Annual Report for the year ended 31
December 2010, which has been prepared in accordance with IFRS as
adopted by the European Union, and any public announcements made by
the Group during the interim reporting period.
The financial information set out in this interim report does
not constitute statutory accounts as defined in Section 435 of the
Companies Act 2006. The unaudited condensed interim financial
statements for the three and nine months ended 30 September 2011
have been prepared using accounting policies and presentation
expected to be adopted in the Group's full financial statements for
the year ending 31 December 2011, which are not expected to be
significantly different to those set out in note 1 to the Group's
audited financial statements for the year ended 31 December
2010.
The Company's statutory financial statements for the year ended
31 December 2010 have been filed with the Registrar of Companies
and are available on the Company's website www.avocetmining.com.
The auditor's report on those financial statements was unqualified
and did not contain a statement under sections 498(2) or (3) of the
Companies Act 2006.
After review of the Group's operations, the directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, the directors continue to adopt the going concern
basis in preparing the unaudited condensed interim financial
statements.
2. Disposal Group Classified as Held for Sale and Discontinued Operations
Disposal of discontinued operations to J&Partners L.P.
On 24 June 2011, Avocet completed the sale of its main South
East Asian assets, namely its 100 per cent interest in the Penjom
gold mine in Malaysia and its 80 per cent interest in PT Avocet
Bolaang Mongondow ("PT ABM"), which owns the North Lanut mine and
Bakan project in North Sulawesi, Indonesia, for proceeds of US$170
million. In the Q3 2011, Avocet announced that further sales had
been concluded, namely PT Avocet Mining Services, Avocet Mining
(Malaysia) OHQ Sdn. Bhd, its 75 per cent interest in PT Gorontalo
Sejahtera Mining, and its 60 per cent in interest in PT Arafura
Surya Alam. The combined gross proceeds for the disposals completed
in the Q3 2011 were US$27 million. All of the sales completed in
2011 were originally announced on 24 December 2010.
In accordance with IFRS 5, Non-current Assets Held for Sale and
Discontinued Operations, all of the assets and liabilities of the
Indonesian and Malaysian operations, apart from cash, were treated
as a disposal group from the date of the announcement of the sale
on 24 December 2010, and were disclosed separately in the statement
of financial position at 31 December 2010 and 31 March 2011, and
the remaining entities at 30 June 2011 and 30 September 2011. As
the transaction was on a cash free debt free basis, the cash held
by entities held for sale was classified as continuing operations
rather than discontinued operations. Comparative statements of
financial position, prior to the signing of the agreement for sale,
are not re-presented. Prior to the reclassification, management
reviewed the carrying values and recognition of assets and
liabilities respectively, and no adjustments were required to
measure assets and liabilities at the lower of carrying value or
fair value less costs to sell. Since 24 December 2010, the date on
which the
criteria for being held for sale were met, no depreciation has
been charged in the Group financial statements for the Malaysian
and Indonesian assets, in accordance with IFRS.
The results of the disposal group are presented separately in
the consolidated income statement and the segmental analysis, and
comparative income statements are represented on this basis, as
required by IFRS.
The provisional profit on disposal of the entities sold during
2011 is presented below in note 2a). The final profit will be
determined following the agreement of completion accounts.
Disposal of Discontinued Operations to Golden Peaks Resources
Limited
During the period, Avocet completed the sale of PT Arafura
Mandiri Semangat (PT Arafura) and PT Aura Celebes Mandiri (PT ACM)
to Reliance Resources Limited, a company owned by Golden Peaks
Resources Limited (Golden Peaks). Consideration was in the form of
7.9 million Golden Peaks shares. Golden Peaks is listed on the
Toronto Stock Exchange. PT AMS and PT ACM held non-core exploration
projects in Indonesia. The carrying value of the assets was
included in the balances of the disposal group held for sale at 31
December 2010. Further details of the profit on disposal is
included in note 2d.
(a) Provisional unaudited profit on disposal of discontinued operations to J&Partners L.P.
Q2 2011 Q3 2011 2011 YTD
======================================= ========= ======== =========
US$000 US$000 US$000
Consideration received 170,000 27,000 197,000
Cash held in subsidiaries at
completion 15,558 1,719 17,277
Working capital and other adjustments (4,565) (6,812) (11,377)
======================================= ========= ======== =========
Net consideration 180,993 21,907 202,900
Less transaction costs (17,450) (679) (18,129)
Net assets disposed (b) (91,363) (8,233) (99,596)
Foreign currency translation
reserve recycled on disposal 627 - 627
Pre-tax provisional profit on
disposal of discontinued operations 72,807 12,995 85,802
Taxation(1) - - -
======================================= ========= ======== =========
Post-tax provisional profit on
disposal of discontinued operations 72,807 12,995 85,802
======================================= ========= ======== =========
(1) The Company anticipates that no UK tax will be payable on
the disposal of its operations in South East Asia on the basis that
the sale qualifies for the UK substantial shareholding
exemption.
(b) Provisional and unaudited carrying amounts of assets and
liabilities of discontinued operations sold in the period to
J&Partners L.P.
Q2 2011 Q3 2011 2011 YTD
=============================== ========= ======== =========
Assets US$000 US$000 US$000
Goodwill 13,555 - 13,555
Intangible assets 17,467 4,227 21,694
Property, plant and equipment 62,547 305 62,852
Deferred tax assets 1,977 - 1,977
Inventories 21,199 - 21,199
Trade and other receivables 8,957 555 9,512
Other assets held for sale - 1,020 1,020
Cash 15,558 1,785 17,343
=============================== ========= ======== =========
141,260 7,892 149,152
=============================== ========= ======== =========
Liabilities
Trade and other payables (13,158) (223) (13,381)
Tax liabilities (3,108) - (3,108)
Deferred tax liabilities (3,492) - (3,492)
Other liabilities (21,520) - (21,520)
=============================== ========= ======== =========
(41,278) (223) (41,501)
=============================== ========= ======== =========
Net assets 99,982 7,669 107,651
=============================== ========= ======== =========
Non-controlling interest
share of assets disposed (8,619) 564 (8,055)
=============================== ========= ======== =========
Net assets disposed 91,363 8,233 99,596
=============================== ========= ======== =========
(c) Cash flows on disposal of discontinued operations to J&Partners L.P.
Q2 2011 Q3 2011 2011
===================================== ========= ======== =========
US$000 US$000 US$000
Disposal consideration 170,000 27,000 197,000
Advance payment in respect of cash
held by subsidiaries at completion 9,704 353 10,057
Transaction costs paid (5,995) (6,712) (12,707)
===================================== ========= ======== =========
Net cash received in the period 173,709 20,641 194,350
===================================== ========= ======== =========
Cash held in subsidiaries sold (15,558) (1,785) (17,343)
===================================== ========= ======== =========
Net cash movement on disposal of
subsidiaries 158,151 18,856 177,007
===================================== ========= ======== =========
In addition to the cash-free debt-free purchase consideration of
US$197 million, a further US$10.1 million was received in respect
of cash balances in the disposed subsidiaries as estimated at the
time of signing of the sale agreements in December 2010. Actual
cash balances at that date, which are subject to review and
finalisation as part of the completion accounts, are expected to be
US$17.3 million, US$15.2 million of which is attributable to the
Group. On agreement of the completion accounts, the Company will
receive a further payment in respect of cash held at completion,
payment is estimated at US$5.1 million. The Company will also
receive or pay amounts related to working capital, being the
difference between estimates at 24 December 2010 and actual
balances in the completion accounts.
(d) Disposal of Exploration Assets to Reliance Resources Limited
2011 YTD
=============================== =========
US$000
Consideration received 2,313
Net liabilities held for sale 114
=============================== =========
Profit on disposal 2,427
=============================== =========
All consideration received was in the form of shares in Golden
Peaks Resources Limited.
3. Segmental Reporting
Discontinued
Continuing operations operations
=========================================== ================================= ============= =========
For the three months ended 30
September 2011 UK West Africa Total Total TOTAL
=========================================== ======== ============ ========= ============= =========
US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 42,413 42,413 - 42,413
=========================================== ======== ============ ========= ============= =========
Cost of Sales 572 (33,139) (32,567) (939) (33,506)
=========================================== ======== ============ ========= ============= =========
Cash production costs:
- mining - (8,476) (8,476) - (8,476)
- processing - (10,017) (10,017) - (10,017)
- overheads - (6,063) (6,063) - (6,063)
- royalties - (3,040) (3,040) - (3,040)
=========================================== ======== ============ ========= ============= =========
- (27,596) (27,596) - (27,596)
Changes in inventory - 4,902 4,902 - 4,902
Other cost of sales (a) 605 (2,690) (2,085) (939) (3,024)
Depreciation and amortisation (b) (33) (7,755) (7,788) - (7,788)
==================================== ===== ======== ============ ========= ============= =========
Gross profit 572 9,274 9,846 (939) 8,907
Administrative expenses
and share based payments (2,682) - (2,682) - (2,682)
=========================================== ======== ============ ========= ============= =========
(Loss)/profit from operations (2,110) 9,274 7,164 (939) 6,225
Profit on disposal of investments - - - 2,427 2,427
Profit on disposal of subsidiaries - - - 12,995 12,995
Restructure of hedge - (39,757) (39,757) - (39,757)
Net finance items 37 (984) (947) (7) (954)
(Loss)/profit before taxation (2,073) (31,467) (33,540) 14,476 (19,064)
=========================================== ======== ============ ========= ============= =========
Analysed as:
(Loss)/profit before tax
& exceptional items (2,073) 8,290 6,217 (946) 5,271
Exceptional items - (39,757) (39,757) 15,422 (24,335)
=========================================== ======== ============ ========= ============= =========
Taxation - 7,323 7,323 - 7,323
=========================================== ======== ============ ========= ============= =========
(Loss)/profit for the period (2,073) (24,144) (26,217) 14,476 (11,741)
=========================================== ======== ============ ========= ============= =========
Attributable to:
Equity shareholders of parent
company (2,073) (21,562) (23,635) 14,518 (9,117)
Non-controlling interests - (2,582) (2,582) (42) (2,624)
=========================================== ======== ============ ========= ============= =========
(2,073) (24,144) (26,217) 14,476 (11,741)
========================================== ======== ============ ========= ============= =========
EBITDA (c) (2,077) 17,029 14,952 (939) 14,013
==================================== ===== ======== ============ ========= ============= =========
(a) Other cost of sales represents costs not directly
attributable to production, including exploration expenditure
expensed;
(b) Includes amounts in respect of the amortisation of mine closure provision at Inata;
(c) EBITDA represents earnings before exceptional items, finance
items, tax, depreciation and amortisation. EBITDA is not defined by
IFRS but is commonly used as an indication of underlying cash
generation.
Continuing operations Discontinued
================================== ===== ================================== =============
At 30 September 2011 UK West Africa Total Total TOTAL
================================== ===== ========= ============ ========= ============= =========
US$000 US$000 US$000 US$000 US$000
STATEMENT OF FINANCIAL POSITION
Non-current assets 3,926 284,715 288,641 - 288,641
Inventories - 40,650 40,650 - 40,650
Trade and other receivables 3,101 19,588 22,689 - 22,689
Assets held for sale - - - 1,935 1,935
Cash and cash equivalents 100,490 19,883 120,373 - 120,373
Total assets 107,517 364,836 472,353 1,935 474,288
========================================= ========= ============ ========= ============= =========
Current liabilities (15,650) (54,117) (69,767) - (69,767)
Non-current liabilities (430) (20,314) (20,744) - (20,744)
========================================= ========= ============ ========= ============= =========
Total liabilities (16,080) (74,431) (90,511) - (90,511)
========================================= ========= ============ ========= ============= =========
Net assets 91,437 290,405 381,842 1,935 383,777
========================================= ========= ============ ========= ============= =========
For the three months ended Discontinued
30 September 2011 UK West Africa Total Total TOTAL
US$000 US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
(Loss)/profit for the period (2,073) (24,144) (26,217) 14,476 (11,741)
Adjustments for non-cash and
non-operating items (d) 379 41,526 41,905 (15,423) 26,482
Movements in working capital (508) (11,992) (12,500) (479) (12,979)
========================================= ========= ============ ========= ============= =========
Net cash (used in)/generated
by operations (2,202) 5,390 3,188 (1,426) 1,762
Net interest received/(paid) 20 (550) (530) - (530)
Purchase of property, plant
and equipment - (18,586) (18,586) 3 (18,583)
Deferred exploration expenditure - (2,796) (2,796) - (2,796)
Net proceeds from disposal
of discontinued operations 18,856 - 18,856 - 18,856
Restructure of hedge (39,757) - (39,757) - (39,757)
Dividend (6,505) - (6,505) - (6,505)
Other cash movements (e) (28,943) 16,153 (12,790) 1,423 (11,367)
Total decrease in cash and
cash equivalents (58,531) (389) (58,920) - (58,920)
========================================= ========= ============ ========= ============= =========
(d) Includes depreciation and amortisation, share based
payments, movement in provisions, profit on disposal of assets,
taxation in the income statement, and other non-operating items in
the income statement;
(e) Other cash movements include cash flows in respect of
financing activities, and exchange gains or losses.
Continuing operations Discontinued
operations
============================================ ================================= =============
For the three months ended 30 September
2010 UK West Africa Total Total TOTAL
============================================ ======== ============ ========= ============= =========
US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 44,299 44,299 33,190 77,489
============================================ ======== ============ ========= ============= =========
Cost of Sales 435 (34,966) (34,531) (26,062) (60,593)
============================================ ======== ============ ========= ============= =========
Cash production costs:
- mining - (4,609) (4,609) (11,812) (16,421)
- processing - (8,519) (8,519) (5,201) (13,720)
- overheads - (4,807) (4,807) (2,362) (7,169)
- royalties - (3,330) (3,330) (1,334) (4,664)
============================================ ======== ============ ========= ============= =========
- (21,265) (21,265) (20,709) (41,974)
Changes in inventory - (1,160) (1,160) (833) (1,993)
Other cost of sales (a) 464 (1,645) (1,181) (1,806) (2,987)
Depreciation and amortisation (b) (29) (10,896) (10,925) (2,714) (13,639)
===================================== ===== ======== ============ ========= ============= =========
Gross profit 435 9,333 9,768 7,128 16,896
Administrative expenses and
share based payments (2,675) - (2,675) - (2,675)
============================================ ======== ============ ========= ============= =========
(Loss)/profit from operations (2,240) 9,333 7,093 7,128 14,221
Net finance items (474) (748) (1,222) 309 (913)
============================================ ======== ============ ========= ============= =========
(Loss)/profit before taxation (2,714) 8,585 5,871 7,437 13,308
Taxation - - - (452) (452)
============================================ ======== ============ ========= ============= =========
(Loss)/profit for the period (2,714) 8,585 5,871 6,985 12,856
============================================ ======== ============ ========= ============= =========
Attributable to:
Non-controlling interest - 698 698 879 1,577
Equity shareholders of parent
company (2,714) 7,887 5,173 6,106 11,279
============================================ ======== ============ ========= ============= =========
(2,714) 8,585 5,871 6,985 12,856
=========================================== ======== ============ ========= ============= =========
EBITDA (c) (2,211) 20,229 18,018 9,842 27,860
===================================== ===== ======== ============ ========= ============= =========
(a) Other cost of sales represents costs not directly
attributable to production, including exploration expenditure
expensed;
(b) Includes amounts in respect of the amortisation of mine
closure provisions at Inata, Penjom and North Lanut;
(c) EBITDA represents earnings before exceptional items, finance
items, tax, depreciation and amortisation. EBITDA is not defined by
IFRS but is commonly used as an indication of underlying cash
generation.
Discontinued
Continuing operations operations
================================== ===== =================================== =============
At 30 September 2010 UK West Africa Total Total TOTAL
================================== ===== ========= ============ ========== ============= ==========
US$000 US$000 US$000 US$000 US$000
STATEMENT OF FINANCIAL POSITION
Non-current assets 5,750 245,086 250,836 89,485 340,321
Inventories - 16,859 16,859 22,676 39,535
Trade and other receivables 842 18,568 19,410 6,910 26,320
Assets held for sale 4,612 2,600 7,212 - 7,212
Cash and cash equivalents 7,800 18,687 26,487 19,818 46,305
Total assets 19,004 301,800 320,804 138,889 459,693
========================================= ========= ============ ========== ============= ==========
Current liabilities (2,119) (57,992) (60,111) (17,364) (77,475)
Non-current liabilities (28,063) (36,768) (64,831) (17,396) (82,227)
========================================= ========= ============ ========== ============= ==========
Total liabilities (30,182) (94,760) (124,942) (34,760) (159,702)
========================================= ========= ============ ========== ============= ==========
Net assets (11,178) 207,040 195,862 104,129 299,991
========================================= ========= ============ ========== ============= ==========
For the three months ended
30 September 2010 UK West Africa Total Total TOTAL
US$000 US$000 US$000 US$000 US$000
================================== ===== ========= ============ ========== ============= ==========
CASH FLOW STATEMENT
(Loss)/profit for the period (2,714) 8,585 5,871 6,985 12,856
Adjustments for non-cash and
non-operating items (d) 823 11,682 12,505 2,803 15,308
Movements in working capital 1,096 (1,929) (833) 1,220 387
========================================= ========= ============ ========== ============= ==========
Net cash (used in)/generated
by operations (795) 18,338 17,543 11,008 28,551
Net interest (paid)/received (46) (984) (1,030) 14 (1,016)
Net tax received - - - 1,458 1,458
Purchase of property, plant
and equipment (35) (19,459) (19,494) (897) (20,391)
Deferred exploration expenditure (73) (416) (489) (1,196) (1,685)
Other cash movements (e) (2,691) (1,030) (3,721) (2,238) (5,959)
Total (decrease)/increase
in cash and cash equivalents (3,640) (3,551) (7,191) 8,149 958
========================================= ========= ============ ========== ============= ==========
(d) Includes depreciation and amortisation, share based
payments, movement in provisions, taxation in the income statement,
and other non-operating items in the income statement;
(e) Other cash movements include deferred consideration paid,
cash flows from financing activities, and exchange gains or
losses.
Continuing operations Discontinued
operations
=========================================== ================================== =============
For the nine months ended 30 September UK West Africa Total Total TOTAL
2011
=========================================== ======== ============ ========== ============= ==========
US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 142,929 142,929 67,236 210,165
=========================================== ======== ============ ========== ============= ==========
Cost of Sales 997 (107,052) (106,055) (51,101) (157,156)
=========================================== ======== ============ ========== ============= ==========
Cash production costs:
- mining - (22,874) (22,874) (27,336) (50,210)
- processing - (29,246) (29,246) (12,046) (41,292)
- overheads - (17,558) (17,558) (4,842) (22,400)
- royalties - (10,198) (10,198) (2,552) (12,750)
=========================================== ======== ============ ========== ============= ==========
- (79,876) (79,876) (46,776) (126,652)
Changes in inventory - 6,926 6,926 (44) 6,882
Other cost of sales (a) 1,098 (5,968) (4,870) (4,281) (9,151)
Depreciation and amortisation (b) (101) (28,134) (28,235) - (28,235)
==================================== ===== ======== ============ ========== ============= ==========
Gross profit 997 35,877 36,874 16,135 53,009
Administrative expenses and
share based payments (8,154) - (8,154) - (8,154)
=========================================== ======== ============ ========== ============= ==========
(Loss)/profit from operations (7,157) 35,877 28,720 16,135 44,855
Profit on disposal of investments - 8,990 8,990 2,427 11,417
Profit on disposal of subsidiaries - - - 85,802 85,802
Restructure of hedge - (39,757) (39,757) - (39,757)
Net finance items (655) (3,406) (4,061) (26) (4,087)
(Loss)/profit before taxation (7,812) 1,704 (6,108) 104,338 98,230
=========================================== ======== ============ ========== ============= ==========
Analysed as:
Profit before tax & exceptional
items (7,812) 32,471 24,659 16,109 40,768
Exceptional items - (30,767) (30,767) 88,229 57,462
=========================================== ======== ============ ========== ============= ==========
Taxation (865) 3,586 2,721 (2,723) (2)
=========================================== ======== ============ ========== ============= ==========
(Loss)/profit for the period (8,677) 5,290 (3,387) 101,615 98,228
=========================================== ======== ============ ========== ============= ==========
Attributable to:
Equity shareholders of parent
company (8,677) 6,517 (2,160) 99,448 97,288
Non-controlling interests - (1,227) (1,227) 2,167 940
=========================================== ======== ============ ========== ============= ==========
(8,677) 5,290 (3,387) 101,615 98,228
========================================== ======== ============ ========== ============= ==========
EBITDA (c) (7,056) 64,011 56,955 16,135 73,090
==================================== ===== ======== ============ ========== ============= ==========
(a) Other cost of sales represents costs not directly
attributable to production, including exploration expenditure
expensed;
(b) Includes amounts in respect of the amortisation of mine closure provision at Inata;
(c) EBITDA represents earnings before exceptional items, finance
items, tax, depreciation and amortisation. EBITDA is not defined by
IFRS but is commonly used as an indication of underlying cash
generation.
For the nine months ended 30 Continuing operations Discontinued
September 2010 operations
========================================== ================================== =============
UK West Africa Total Total TOTAL
=================================== ===== ========= ============ ========= ============= ==========
US$000 US$000 US$000 US$000 US$000
INCOME STATEMENT
Revenue - 80,904 80,904 88,639 169,543
========================================== ========= ============ ========= ============= ==========
Cost of Sales (605) (59,061) (59,666) (74,110) (133,776)
========================================== ========= ============ ========= ============= ==========
Cash production costs:
- mining - (9,194) (9,194) (33,126) (42,320)
- processing - (15,099) (15,099) (14,931) (30,030)
- overheads - (8,650) (8,650) (6,791) (15,441)
- royalties - (6,078) (6,078) (3,550) (9,628)
========================================== ========= ============ ========= ============= ==========
- (39,021) (39,021) (58,398) (97,419)
Changes in inventory 2,309 2,309 (1,487) 822
Other cost of sales (a) (514) (2,862) (3,376) (4,392) (7,768)
Depreciation and amortisation (b) (91) (19,487) (19,578) (9,833) (29,411)
=================================== ===== ========= ============ ========= ============= ==========
Gross (loss)/profit (605) 21,843 21,238 14,529 35,767
Administrative expenses and
share based payments (8,644) - (8,644) - (8,644)
========================================== ========= ============ ========= ============= ==========
(Loss)/profit from operations (9,249) 21,843 12,594 14,529 27,123
Profit on disposal of investments 1,986 - 1,986 - 1,986
Net finance items before
exceptional (939) (1,781) (2,720) 378 (2,342)
Exceptional finance items (2,363) - (2,363) - (2,363)
========================================== ========= ============ ========= ============= ==========
(Loss)/profit before taxation (10,565) 20,062 9,497 14,907 24,404
========================================== ========= ============ ========= ============= ==========
Analysed as:
(Loss)/profit before tax
and exceptional items (10,188) 20,062 9,874 14,907 24,781
Exceptional items (377) - (377) - (377)
========================================== ========= ============ ========= ============= ==========
Taxation (873) - (873) (2,052) (2,925)
========================================== ========= ============ ========= ============= ==========
(Loss)/profit for the period (11,438) 20,062 8,624 12,855 21,479
========================================== ========= ============ ========= ============= ==========
Attributable to:
Non-controlling interest - 1,805 1,805 1,882 3,687
Equity shareholders of parent
company (11,438) 18,257 6,819 10,973 17,792
========================================== ========= ============ ========= ============= ==========
(11,438) 20,062 8,624 12,855 21,479
========================================= ========= ============ ========= ============= ==========
EBITDA (c) (9,158) 41,330 32,172 24,362 56,534
=================================== ===== ========= ============ ========= ============= ==========
(a) Other cost of sales represents costs not directly
attributable to production, including exploration expenditure
expensed;
(b) Includes amounts in respect of the amortisation of mine
closure provisions at Inata, Penjom and North Lanut;
(c) EBITDA represents earnings before exceptional items, finance
items, tax, depreciation and amortisation. EBITDA is not defined by
IFRS but is commonly used as an indication of underlying cash
generation.
Continuing operations Discontinued
operations
==================================== ===== ================================== ============= =========
For the nine months ended 30 September
2011 UK West Africa Total Total TOTAL
=========================================== ========= ============ ========= ============= =========
US$000 US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
(Loss)/profit for the period (8,677) 5,290 (3,387) 101,615 98,228
Adjustments for non-cash and
non-operating items (d) 617 61,016 61,633 (85,107) (23,474)
Movements in working capital (3,423) (20,472) (23,895) (1,660) (25,555)
=========================================== ========= ============ ========= ============= =========
Net cash (used in)/generated
by operations (11,483) 45,834 34,351 14,848 49,199
Net interest (paid)/received (590) (1,884) (2,474) 17 (2,457)
Net tax paid (865) - (865) (3,679) (4,544)
Purchase of property, plant
and equipment (9) (40,573) (40,582) (881) (41,463)
Deferred exploration expenditure - (22,027) (22,027) (2,995) (25,022)
Net proceeds from disposal of
discontinued operations 177,007 - 177,007 - 177,007
Restructure of hedge (39,757) - (39,757) - (39,757)
Dividend (6,505) - (6,505) - (6,505)
Other cash movements (e) (47,851) 19,553 (28,298) (7,310) (35,608)
Total increase in cash and cash
equivalents 69,947 903 70,850 - 70,850
=========================================== ========= ============ ========= ============= =========
For the nine months ended 30
September 2010 UK West Africa Total Total TOTAL
======================================== ===== ========= ============ ========= ========= =========
US$000 US$000 US$000 US$000 US$000
CASH FLOW STATEMENT
(Loss)/profit for the period (11,438) 20,062 8,624 12,855 21,479
Adjustments for non-cash and
non-operating items (d) 8,444 21,505 29,949 12,175 42,124
Movements in working capital 943 (17,995) (17,052) (2,804) (19,856)
=============================================== ========= ============ ========= ========= =========
Net cash (used in)/generated
by operations (2,051) 23,572 21,521 22,226 43,747
Net interest (paid)/received (602) (2,826) (3,428) 83 (3,345)
Net tax received - - - 2,248 2,248
Purchase of property, plant
and equipment (56) (34,432) (34,488) (667) (35,155)
Inata pre-commercial revenues
capitalised (f) - 21,495 21,495 - 21,495
Inata pre-commercial costs capitalised (f) - (14,296) (14,296) - (14,296)
Deferred exploration expenditure (122) (2,721) (2,843) (5,062) (7,905)
Other cash movements (e) (6,815) 15,877 9,062 (16,602) (7,540)
Total (decrease)/increase in cash
and cash equivalents (9,646) 6,669 (2,977) 2,226 (751)
=============================================== ========= ============ ========= ========= =========
(d) Includes depreciation and amortisation, share based
payments, movement in provisions, taxation in the income statement,
and other non-operating items in the income statement;
(e) Other cash movements include deferred consideration paid,
cash flows from financing activities, and exchange gains or
losses.
(f) All costs and revenues at Inata between 1 January and 31
March 2010 related to the testing and development phase, prior to
the commencement of commercial operations. Therefore, these costs
and revenues were capitalised as part of mining property, plant and
equipment. Since 1 April 2010, all revenues and operating expenses
in respect of mining operations at Inata have been recognised in
the income statement.
4. Unaudited Quarterly Income Statement
Q1 2011 Q2 2011 Q3 2011 2011 YTD
(Unaudited)
(Unaudited) (Unaudited) (Unaudited) 2010
(Audited)
===================================== === ============= ============= ============= ============= ===========
US$000 US$000 US$000 US$000 US$000
Revenue
Continuing operations 55,767 44,749 42,413 142,929 132,779
Discontinued operations 32,021 35,215 - 67,236 121,814
========================================== ============= ============= ============= ============= ===========
87,788 79,964 42,413 210,165 254,593
Cost of sales
Continuing operations (39,288) (34,200) (32,567) (106,055) (95,135)
Discontinued operations (24,430) (25,732) (939) (51,101) (105,533)
========================================== ============= ============= ============= ============= ===========
(63,718) (59,932) (33,506) (157,156) (200,668)
Gross profit 24,070 20,032 8,907 53,009 53,925
========================================== ============= ============= ============= ============= ===========
Administrative expenses -
continuing operations (1,934) (2,872) (2,295) (7,101) (7,040)
Share based payments - continuing
operations (361) (305) (387) (1,053) (8,625)
========================================== ============= ============= ============= ============= ===========
Profit from operations 21,775 16,855 6,225 44,855 38,260
========================================== ============= ============= ============= ============= ===========
Profit on disposal of investments
- continuing operations - 8,990 - 8,990 2,669
Profit on disposal of investments
- discontinued operations - - 2,427 2,427 -
Profit on disposal of discontinued
operations - 72,807 12,995 85,802 -
Restructure of hedge (39,757) (39,757) -
Loss on disposal of property,
plant and equipment - discontinued
operations - - - - (151)
Finance items - continuing
operations
Exchange gains/(losses) 62 (144) 24 (58) (49)
Finance income - - 20 20 5
Finance expense (1,676) (1,356) (991) (4,023) (4,766)
Expenses of listing on Oslo
Bors - - - - (2,363)
Net finance items - discontinued
operations 160 (179) (7) (26) (56)
========================================== ============= ============= ============= ============= ===========
Profit/(loss) before tax 20,321 96,973 (19,064) 98,230 33,549
========================================== ============= ============= ============= ============= ===========
Analysed as:
Profit before taxation and
exceptional items 20,321 15,176 5,271 40,768 33,394
Exceptional items - 81,797 (24,335) 57,462 155
========================================== ============= ============= ============= ============= ===========
Profit/(loss) before taxation 20,321 96,973 (19,064) 98,230 33,549
========================================== ============= ============= ============= ============= ===========
Taxation
Continuing operations (2,621) (1,981) 7,323 2,721 (12,021)
Discontinued operations (1,330) (1,393) - (2,723) (3,316)
========================================== ============= ============= ============= ============= ===========
(3,951) (3,374) 7,323 (2) (15,337)
Profit/(loss) for the period
Profit/(loss) from continuing
operations 9,949 12,881 (26,217) (3,387) 5,454
Profit from discontinued
operations 6,421 80,718 14,476 101,615 12,758
========================================== ============= ============= ============= ============= ===========
Profit/(loss) for the period 16,370 93,599 (11,741) 98,228 18,212
========================================== ============= ============= ============= ============= ===========
EBITDA 32,994 26,083 14,013 73,090 86,272
========================================== ============= ============= ============= ============= ===========
5. Earnings per Share
Earnings per share are analysed in the table below, presenting
earnings per share for continuing and discontinued operations.
30 September 30 September 30 September 30 September
2011 (three 2010 (three 2011 (nine 2010 (nine
months) months) months) months)
Unaudited Unaudited Unaudited Unaudited
======================================= ============= ============= ============= =============
Shares Shares Shares Shares
Weighted average number of shares
for the period
- number of shares with voting
rights 199,077,172 196,491,602 198,955,805 195,449,124
- effect of share options in
issue 3,419,163 2,433,452 3,720,090 1,771,774
======================================= ============= ============= ============= =============
- total used in calculation of
diluted earnings per share 202,496,335 198,925,054 202,675,895 197,220,898
======================================= ============= ============= ============= =============
US$000 US$000 US$000 US$000
Earnings per share from continuing
operations
Profit for the period from continuing
operations (26,217) 5,871 (3,387) 8,624
Adjust for non-controlling interest 2,582 (698) 1,227 (1,805)
======================================= ============= ============= ============= =============
Profit for period attributable
to equity shareholders of the
parent (23,635) 5,173 (2,160) 6,819
======================================= ============= ============= ============= =============
Earnings per share
- basic (cents per share) (11.87) 2.63 (1.09) 3.49
- diluted (cents per share) (11.87) 2.60 (1.09) 3.46
======================================= ============= ============= ============= =============
Earnings per share from discontinued
operations
Profit for the period 14,476 6,985 101,615 12,855
Adjust for non-controlling interest 42 (879) (2,167) (1,882)
====================================== ========== ========== ======== ==========
Profit for period attributable
to equity shareholders of the
parent 14,518 6,106 99,448 10,973
====================================== ========== ========== ======== ==========
Earnings per share
- basic (cents per share) 7.29 3.11 49.98 5.61
- diluted (cents per share) 7.17 3.07 49.07 5.56
====================================== ========== ========== ======== ==========
Total earnings per share
- basic (cents per share) (4.58) 5.74 48.90 9.10
- diluted (cents per share) (4.58) 5.67 48.00 9.02
================================== =========== ======== ======= =======
6. Intangible Assets
Intangible assets represent deferred exploration expenditure.
The movement in the period is analysed below:
30 September
2011
(9 months)
========================= === === =============
At 1 January 2011 11,091
Additions 22,027
Transferred to disposal
group (575)
=================================== =============
At 30 September 2011 32,543
=================================== =============
7. Property, plant and equipment
Mining property
and plant Office equipment
================
Nine months ended
30 September 2011 West Africa UK Total
US$000 US$000 US$000
Cost
At 1 January 2011 272,227 570 272,797
Additions 40,573 9 40,582
At 30 September 2011 312,800 579 313,379
Depreciation
At 1 January 2011 32,494 324 32,818
Charge for the period 28,134 101 28,235
At 30 September 2011 60,628 425 61,053
Net Book Value
At 30 September 2011 252,172 154 252,326
================ ================
At 1 January 2011 239,733 246 239,979
================ ================
8. Other Financial Liabilities
8.1. Interest bearing debt
Other financial liabilities of US$35 million represent the
balance outstanding under a project finance facility from Macquarie
Bank Limited relating to the Inata gold project. US$6 million of
the project finance facility was repaid in the three month period,
in accordance with the facility terms. A total of US$18 million has
been repaid in the year to date. $24 million of this project
finance facility is due for repayment within one year.
US$25 million drawn under a corporate facility with Standard
Chartered Bank was repaid on 24 June 2011 following the substantial
completion of the sale of Company's South East Asian assets. The
facility was secured on the Penjom assets.
8.2. Forward contracts for the delivery of non-financial items -
restructure of hedge book
During the year, the Group continued to physically deliver gold
to meet forward sale contracts in respect of the Inata mine in
Burkina Faso. During the nine months ended 30 September 2011,
67,619 ounces were delivered to meet contract requirements. As at
30 September 2011, 222,750 ounces remained, with physical
deliveries contracted at 8,250 ounces per quarter until June 2018,
at a forward price of US$950 per ounce.
Following the substantial completion of the disposal of Avocet's
South East Asian assets on 24 June 2011, the Group announced the
restructuring and partial buy back of the forward contracts on 27
July 2011, with the result that the hedged proportion of production
from its one remaining producing mine, Inata, was reduced from
approximately 60 per cent to approximately 20 per cent. The
restructure consisted of eliminating 58,432 ounces under the
forward contracts at a cost of US$39.8 million and extending the
delivery profile of the remaining ounces by four years to June
2018. At 30 September 2011 these forward contracts represented a
mark-to-market liability of US$157.3 million based on a gold price
of US$1,620 per ounce at that date.
The forward contracts are considered to be outside of the scope
of IAS 39, on the basis that they are for own use and gold produced
will continue to be physically delivered to meet the contractual
requirement in future periods, and therefore no value is reflected
in the consolidated financial statements for the remaining
contracts, as allowed by the exemption conferred by IAS 39.5. The
restructuring of the contracts, as a response to the significant
change in the Group's production profile following the disposal of
the Penjom Mine and North Lanut, has not changed the nature or
purpose of the contracts, which continue to be held for own use,
nor does it represent a practice of net settlement.
9. Cash and cash equivalents
Included in Group cash and cash equivalents is US$14.7 million
of restricted cash. US$14.0 million of restricted cash relates to
the minimum account balance held in Macquarie Bank Limited, a
condition of the Inata project finance facility, and US$0.7 million
relates to amounts held on restricted deposit in Burkina Faso for
the purposes of environmental rehabilitation work, as required by
the terms of the Inata mining licence.
10. Non-operating items in the Income Statement
In arriving at net cash flow from operating activities, the
following non-operating items in the income statement have been
adjusted for:
30 September 30 September 30 September 30 September
2011 2010 2011 2010
(three months) (three months) (nine months) (nine months)
Unaudited Unaudited Unaudited Unaudited
US$000 US$000 US$000 US$000
Exchange losses/(gains) - continuing
operations 327 (568) 296 (397)
Exchange (gains)/losses - discontinued
operations (10) (295) (201) (242)
Finance expense - continuing
operations 991 1,540 4,023 2,920
Finance income - continuing
operations (20) - (20) -
Net finance items - discontinued
operations 7 (14) 26 (83)
(Profit)/loss on disposal of
other financial assets - - (8,990) 1,152
Profit on disposal of subsidiaries (12,995) - (85,802) -
Expenses of listing on Oslo
Bors - - - 2,363
Restructure of hedge 39,757 - 39,757 -
Profit on disposal of investments (2,427) - (2,427) -
============================================ ================ ================ =============== ===============
Non-operating items in the
income statement 25,630 663 (53,338) 5,713
============================================ ================ ================ =============== ===============
11. Exceptional Items
30 September 30 September 30 September 30 September
2011 2010 2011 2010
(3 months) (3 months) (9 months) (9 months)
Unaudited Unaudited Unaudited Unaudited
============= ============= ============= =============
US$000 US$000 US$000 US$000
Profit on disposal of subsidiaries 12,995 - 85,802 -
Restructure of hedge (39,757) - (39,757) -
Profit/(loss) on disposal
of investments 2,427 - 2,427 -
Profit/(loss) on disposal
of other financial assets
or investments - - 8,990 (1,152)
Profit on redemption of debenture - - - 3,138
Expenses of listing on Oslo
Bors - - - (2,363)
============= ============= ============= =============
Exceptional gain/(loss) (24,335) - 57,462 (377)
============= ============= ============= =============
Profit on Disposal of Subsidiaries
Profit on disposal of subsidiaries relates to the provisional
profit on disposal of the majority of Avocet's South East Asian
assets. Further details of the provisional profit on disposal are
included in note 2.
Restructure of Hedge
On 27 July 2011, Avocet announced the restructure of the forward
contracts for delivery of gold bullion ("the hedge"). The
restructure consisted of eliminating 58,432 ounces under the
forward contracts at a cost of US$39.8 million and extending the
delivery profile of the remaining ounces by four years to June
2018. Further details are provided in note 8.
Profit/(loss) on Disposal of Investments
Avocet completed the sale of PT Arafura Mandiri Semangat (PT
Arafura) and PT Aura Celebes Mandiri (PT ACM) to Reliance Resources
Limited, a company owned by Golden Peaks Resources Limited (Golden
Peaks). Consideration was in the form of 7.9 million shares in
Golden Peaks, a company listed on the Toronto Stock Exchange. PT
Arafura and PT ACM held non-core exploration projects in Indonesia,
and were included in the balances of the disposal group held for
sale at 31 December 2010. Further details are provided in note
2d.
Profit/(loss) on disposal of other financial assets
During the year, Avocet disposed its entire holding of shares in
Avion Gold Corp ("Avion") for cash consideration of US$16.5
million. The Avion shares were acquired as consideration for the
disposal of the Hounde group of licences in 2010. The shares were
recorded in the balance sheet at fair value, with movements in fair
value recognised in equity, in accordance with IAS39. On the
disposal of the shares, accumulated gains previously recognised in
equity were transferred to the income statement and recognised in
the profit on disposal.
During the comparative period, Avocet disposed of the shares
held in Dynasty Gold Corp ("Dynasty"). Shares in Dynasty were also
recorded in the balance sheet at fair value, with movements in fair
value recognised in equity. On the disposal of the shares,
accumulated losses previously recognised in equity were transferred
to the income statement and recognised in the loss on disposal.
Profit on Redemption of Debenture
In the comparative period, a profit on disposal arose from the
redemption of a debenture held by Wega Mining AS, a wholly-owned
subsidiary of Avocet Mining PLC, in Merit Mining Corp ("Merit").
This debenture, along with all remaining assets in Merit, had been
fully written down as part of the fair value adjustments on the
acquisition of Wega Mining. At the time of the acquisition it was
not considered likely that Merit would have the resources to settle
the debenture. Following the investment of approximately CA$16
million in Merit by Hong Kong Huakan Investment Co Ltd, the
repayment was possible, and the gain was therefore classified as
exceptional.
Oslo Listing Costs
On 16 June 2010 Avocet announced its successful listing on Oslo
Bors. Costs of the listing, which were not directly attributable to
new shares issued, were treated as exceptional costs in the period
of the listing. These included US$1.8 million of Stamp Duty Reserve
Tax costs following the transfer of existing Avocet shareholders
from the UK based registration system to the Norwegian VPS share
registration system.
12. Other Financial Assets
30 September 30 September 30 September 30 September
2011 2010 2011 2010
(3 months) (3 months) (9 months) (9 months)
Unaudited Unaudited Unaudited Unaudited
US$000 US$000 US$000 US$000
At 1 July/1 January - 6,180 20,293 9,428
Additions 2,313 - 2,313 -
Disposals - - (17,390) (569)
Fair value adjustment - (1,568) (2,903) (4,247)
Transfer to assets
held for sale - (4,612) - (4,612)
At 30 September 2,313 - 2,313 -
Additions during the quarter relate to shares in Golden Peaks
Resources Limited, a company listed on the Toronto Stock Exchange.
The shares were acquired as consideration for the disposal of two
of the Group's assets in South East Asia. Further details are
provided in note 2d.
Other financial assets disposed of during the year represented
the Company's interest in Avion Gold Corporation (see note 10).
Other financial assets disposed of during the comparative period
represented the Company's interests of 19 per cent in Dynasty Gold
Corporation (Dynasty) (see note 11). The transfer to assets held
for sale in Q3 2010 represents the fair value of the Company's 15
per cent holding in Monument Mining Limited, a company listed on
the TSX Venture Exchange in Canada, the disposal of which was
completed in Q4 2010.
All of the investments discussed above were accounted for as
other financial assets rather than equity accounted, on the basis
that the Company was not in a position to exercise significant
influence over the activities of, and had no board representation
in, any of the companies. The shares were measured at fair value,
with gains or losses on re-measurement recognised in equity. On
disposal, accumulated gains or losses previously recognised in
equity were recognised in the income statement as part of the
exceptional gain or loss calculation (note 11).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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