This past year was one to forget for Avocet Mining (AVM). The gold miner shed its chief executive and nearly 90 per cent of its market value after operational challenges at the company's only mine, Inata, in Burkina Faso, caused production to drop, costs to soar, expansion plans to be put on hold, reserves to be downgraded, and talks to begin with key lenders and shareholders about a potential rescue fundraising.
Granted, Avocet still managed to churn out gross profits of about $35m (£23m) from 135,000 ounces of gold production at cash costs of $1,000 an ounce. But the reserves downgrade and a change in mine plan have forced Avocet to book $135m of impairments on mining assets, which resulted in a net loss of $104m for the year.
So what's in store for 2013? New chief executive David Cather, an experienced mining engineer, plans to maintain production at about the same levels while improving engineering and process plant operations to keep generating cash. He also wants to address the company's hedge book, which would cost Avocet roughly $115m to rid itself of - although Mr Cather insists the company only plans on closing out part of the hedge book, not the whole thing.
AVOCET MINING (AVM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 25p | MARKET VALUE: | £49m | |
| TOUCH: | 24.5-25p | 12-MONTH HIGH: | 236p | LOW: 19.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 143¢ | NET CASH: | $54.9m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009* | 97 | 33.9 | 20.3 | nil |
| 2009†** | nil | -7.6 | -4.8 | nil |
| 2010** | 133 | 17.5 | 2.0 | nil |
| 2011** | 213 | 6.5 | -0.2 | 6.3 |
| 2012** | 204 | -117 | -46.6 | nil |
| % change | -4 | - | - | -100 |
*Year to 31 Mar †Nine-month period **Post-sale of Asian assets £1=$1.50 | ||||
