Finance director Mike Norris

Emerging new gold mine in Guinea: Avocet shows how its done

LSE and Oslo-listed, West Africa focused gold junior Avocet Mining is intent on developing its mining project portfolio as its second gold project, Tri-K in Guinea, assesses funding options – a necessity in light of geological and production challenges at its Burkina Faso-based mine Inata.

“Our new project approach is reflective of market conditions which call for smaller, cost-effective start-up operations while maintaining visibility for longer-term growth alternatives as market conditions improve,” finance director Mike Norris tells Laura Cornish.

The combination of cash constrained markets and a weaker gold price has seen companies move away from large, capital intensive projects. New project development, especially in the junior sector, requires small-scale, lower capital expenditure (capex), easy-to-build mining operations which can move into production quickly and start generating cash quickly as well.

This is the approach Avocet Mining is taking for its project development, primarily in Guinea where it hopes to elevate its status from a single mine operator once Tri-K becomes operational. “What we are configuring at the moment is reflective of tight market and finance conditions – spending tens of millions of dollars rather than hundreds of millions. This is the only practical and effective short-term tactic which best ensures the successful development of new mining projects.

The key however is making sure we have visibility for quick and easy expansions and growth in the longer term as our circumstances, and market circumstances allow,” Norris outlines. Tri-K – A bigger future for Avocet Situated in north-east Guinea, Avocet is focused heavily on the advancement and development of its Tri-K gold project, which Norris describes as the company’s “new mining frontier”. Tri-K has a 480 000 oz maiden ore reserve (7.9 Mt averaging 1.89 g/t). A feasibility study completed in 2013 has revealed a viable and “robust” five to seven year heap leach operation with good grades of 1.89 g/t at 7.9 Mt, producing in the region of 50 000 – 70 000 ozpa of gold for less than $800/oz – based on the near surface oxide zone which equates to only 20% of the total resource. “Our recent focus on the project has been adjusting the capex profile (decreasing the capital and operating costs) to improve cash fl ows as the gold price has weakened.

And it is shaping up to be more robust than a few years back when our original capex numbers were significantly higher.” “It is exciting to have a new focus, which…

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