JOHANNESBURG (miningweekly.com) – Africa-focused gold miner Avocet on Tuesday reported a 6% decline in gold production to 21 650 oz for the three months ended June 30, as its Inata mine, in Burkina Faso, was limited to processing lower grade clean ore, to preserve the higher grade carbonaceous ore to be processed in the new carbon blinding circuit, which was expected to be commissioned in September.
This also resulted in first-half production declining to 44 798 oz, from 61 726 oz previously.
The company said the lower second quarter production meant that full-year guidance was now about 105 000 oz, as opposed to guidance of between 105 000 oz and 115 000 oz provided following the first quarter.
Lower gold production also translated into a fall in revenue of $21.1-million during the first half of the year, from $80.5-million in the first half of 2013 to $59.4-million, while a net loss before taxation and exceptional items of $20.2-million was reported in the six months to June 30, compared with a loss of $8.2-million for the first half of 2013.
In response, a number of cost reduction measures had been implemented, notably a reduction in mining volumes, as pit shells were reduced in size to cut waste stripping.
As a result, cost of sales fell by $8.7-million, or 11%, during the first half of the year, compared with the equivalent period in 2013, and administrative expenses fell by a further $2.1-million, or 45%.
“As a result, in June, we announced that the funding requirement at Inata, which in December last year was estimated at between $20-million and $30-million, had been reduced to between $15-million and $20-million,” the company said.
“As a result of efforts to reduce costs and capital expenditure in 2014, Inata's funding requirement of between $15-million and $20-million is now expected to be addressed by arrangements with Ecobank and other parties that will ease liquidity for the rest of the year,” Avocet CEO David Cather added.
He further noted that in the second half of the year, the company would focus on further cost reductions and on successfully commissioning the carbon blinding circuit in September, which would increase monthly gold production.
“With a lower cost base and higher production expected for the future, we are now looking at the upside potential in and around Inata,” he said.
Avocet's share price had fallen by 6.64% to 7.73 pence at 11:30 on Tuesday, down from 8.28 pence at Monday's closing.