Wednesday June 24, 10:25 AM
UPDATE 2-Avocet annual profit falls 10 pct on lower output
By Julie Crust
LONDON, June 24 (Reuters) - Gold producer Avocet Mining Plc (LSE: AVM.L - news) said on Wednesday its annual pretax
profit fell 10 percent as lower production at its two mature mines and higher costs outweighed an increase in gold prices.
Pretax profit fell to $33.9 million in the year to end March, in line with expectations, from $37.6 million the previous year.
The shares were down 0.6 percent at 79.25 pence at 0833 GMT.
Total gold production dropped 33 percent to 109,919 ounces. Lower output and higher oil prices helped push cash costs up 60 percent to $551 an ounce.
Avocet expects production in the current quarter at the Penjom mine in Malaysia to fall from the fourth quarter, on lower grades and recoveries, while output from North Lanut in Indonesia is expected to be in line or better.
Chief Executive Jonathan Henry told Reuters that he anticipates higher cash costs this quarter from Penjom and lower costs from North Lanut.
The company said it hadn't seen much of an increase in diesel prices in Asia, as governments have delayed passing on higher prices, but is seeing very high prices in Burkina Faso where a newly acquired mine is set to start producing.
Diesel accounts for about 15-25 percent of Avocet's total costs.
The AIM-listed miner on Wednesday completed its acquisition of Oslo-listed Wega Mining ASA.
It said it will continue to look for growth opportunities in South East Asia and West Africa.
'There is nothing imminent right now,' said Henry.
GOLD PRICES
Following the Wega acquisition, Avocet will have 350,000 ounces of gold hedged at an average $958 an ounce over a 54 month period.
'We would like to remain unhedged to the upside therefore we have to examine ways we can remove ourselves from that position if it all possible,' said Henry. 'People want to invest in gold mining companies for exposure to gold prices.'
All of Avocet's sales during the financial year were at spot prices with an average price of $870 an ounce.
The company said the outlook for gold prices remains strong looking forward into 2010.
Its gold hedge is set to start as the Inata mine in Burkina Faso begins production.
First output from the mine, which is expected to produce more than 120,000 ounces of gold a year, is expected in late 2009 and full steady state production in FY2011. Avocet announced delays at the mine earlier this month.
It has changed the main engineering firm since acquiring the mine and is hopeful of getting the project up and running by October, Henry said.
Elsewhere, the company has drilled 44,000 metres of an approximately 80,000 metres development drilling programme at Penjom and said results so far have been positive. It plans to have a resources update in the next couple of months.
(Editing by Paul Hoskins and Hans Peters) Keywords: AVOCET/
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
