Commodities

LONDON (ShareCast) - Gold miner Avocet Mining (LSE: AVM.L - news) has completed the acquisition of Wega Mining, which should reverse the decline in gold production the company experienced last year.

Total gold production from continuing operations in the year ending 31 march 2009 slipped by a third to 109,919 ounces from 164,832 ounces the year before, reflecting lower grades at its Penjom mine and processing issues at both Penjom and North Lanut.

The company said the acquisition of Wega would enable it to double gold production. once the Inata gold project reaches steady state, "with the very real prospect of extending this further through additions to near mine resources," the company's chief executive officer Jonathan Henry said.

The average realised gold price in the latest period was $870, up 13% on the previous year's figure of $767, but this was not enough to compensate for the reduced production. As a result profit before tax and exceptional items slumped 71% to $15m from $52.4m the year before.

With exceptional items included profit before tax eased 10% to $33.9m from $37.6m.

"The outlook for the gold price remains strong looking forward into 2010," opined company chairman Nigel McNair Scott. "Economic uncertainty and the impending threat of inflation lead many analysts to forecast a short term strengthening of price," he added.