JOHANNESBURG (miningweekly.com) – Avocet Mining says it continues to progress a business review initiated in January to address the company's financial requirements, with discussions with “multiple parties” about possible investment or asset sale transactions to repay the outstanding $15-million loan due to Avocet's largest shareholder, Elliott Management, ongoing.

The West Africa-focused gold company was also looking at options to ensure adequate working capital for the remainder of the year and to progress its Inata gold operation, in Burkina Faso.

In the meantime, the company said it had taken further steps to reduce costs and minimise capital expenditure at Inata to manage the mine's limited cash resources in the period leading up to the commissioning of the new carbon blinding circuit. 

For now, the operation remained reliant on low-grade oxide ore, preserving the higher-grade transitional and fresh ore, which was more carbonaceous and would deliver lower recoveries if processed through the current plant configuration. 

Following the commissioning of the carbon blinding circuit, which was now targeted for September, following the late delivery to site of key components, Inata was forecast to process the higher-grade carbonaceous ore at higher recoveries.

The company reported in December that an estimated life-of-mine (LoM) plan for Inata showed negative cash flow in 2014 and a requirement for further short-term funding of between $20-million and $30-million for this year. 

It also indicated that, according to the estimated LoM plan, the operation should generate prefinancing cash flows of some $180-million at a gold price of $1 200/oz between 2015 and 2018.

Since then, further work had been undertaken on the plan, which determined that the short-term funding requirement for this year would be between $15-million and $20-million.

The prefinancing cash flows had also decreased to around $115-million at a gold price of $1 250/oz between 2015 and 2018.

Avocet said in a business update on Thursday that these changes, which were provisional, pending completion of technical work in a number of areas, reflected a number of amendments.

These included the exclusion from the LoM plan of high-grade inferred material at the Souma South pit, representing about 56 000 oz, pending further drilling work; increased waste stripping volumes at the Inata North and Central pits; and higher operating, working capital and mine closure costs towards the end of mine life than assumed in the previous estimate.

However, the LoM plan did not include possible sources of additional value at Inata, such as further cash savings from a reduction in Inata's cost base and achieving working capital efficiencies; the Souma South pit, or any of the remaining areas at Souma other than Souma Central; new sources of oxide elsewhere in the Belahouro district; and heap-leaching of lower-grade material.