Avocet Mining Strategic Update and Interim Results Presentation 27 July 2011
Disclaimer This Presentation is for information purposes in connection with the Avocet Mining PLC � s (the � Company � s � ) preliminary results presentation only. While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers give, have given or have authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of the accuracy or completeness of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation. This Presentation may contain forward-looking statements regarding Avocet Mining PLC and its subsidiaries. These statements are based on various assumptions made by the Company, which are beyond its control and which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements may in some cases be identified by terminology such as � may � , � will � , � could � , � should � , � expect � , � plan � , � intend � , � anticipate � , � believe � , � estimate � , � predict � , � potential � or � continue � , the negative of such terms or other comparable terminology. These forward looking statements are only predictions. Actual events or results may differ materially, and a number of factors may cause our actual results to differ materially from any such statement. Such factors include among others general market conditions, demand for our products, development in reserves and resources, unpredictable changes in regulations affecting our markets, market acceptance of products and such other factors that may be relevant from time to time. Although we believe that the expectations and assumptions reflected in the statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievement. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Presentation to conform these statements to actual results or to changes in our expectations. You are advised, however, to consult any further public disclosures made by us, such as filings made with the Oslo Stock Exchange or press releases. This Presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. Copies of this Presentation should not be distributed in or sent into any jurisdiction where such distribution may be unlawful. United Kingdom: This Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000 and therefore it is being delivered for information purposes only to a very limited number of persons and companies who are persons who have professional experience in matters relating to investments and who fall within the category of person set out in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or are high net worth companies within the meaning set out in Article 49 of the Order or are otherwise permitted to receive it. Any other person who receives this Presentation should not rely or act upon it. By accepting this Presentation, the recipient represents and warrants that they are a person who falls within the above description of persons entitled to receive the Presentation. 2
Avocet Mining Fully focused on gold mining and exploration in West Africa Consistent gold production from operational Inata mine in Burkina Faso Focused and funded for Extensive exploration pipeline supporting growth in West Africa significant organic growth Strong balance sheet underpinning exploration and development plans in both Burkina Faso and Guinea Experienced management team that can support Company through next growth phase 3
Corporate Overview Largest shareholders Current market statistics � Elliott � OSE & AIM � AVM 228.0 p 12.9% � Datum � Market capitalisation US$735.1 m 12.2 % � BlackRock � Shares outstanding 199.5 m 7.2% � JP Morgan � Cash US$179.3 m 7.7 % � Prelas AS � Net cash US$138.3 m 3.4% � Enterprise value US$596.8 m Directors � Russell Edey, Chairman 280.00 � Harald Arnet AVM relative to Gold and FTSE � Mike Donoghue 260.00 � Robert Pilkington � Barry Rourke 240.00 � Brett Richards, CEO 220.00 � Mike Norris, Finance Director Exco 200.00 � Brett Richards � Mike Norris 180.00 � Peter Flindell � Richard Gray 160.00 4 AVOCET GOLD FTSE GOLD MINES INDEX 4
Strategic Update � Scoping study to significantly increase production at Inata initiated, target to bring production online early 2013 � Resource development at Tri-K in Guinea, objective to advance Koulékoun towards feasibility study in Q4 2011 � Dividend policy adopted +US$20 million p.a., subject to growth funding requirements � 20% of Inata hedge book bought back, remainder restructured over 7 years � 80% of Inata current production now exposed to spot prices � Cash of US$179 million after repaying US$25 million Standard Chartered corporate debt in June 2011 � Inata debt of US$41 million to continue to repaid at US$6 million/quarter � Sale of South East Asian assets, proceeds of US$170m received � Further sale of other assets expected Q3 2011 for US$30 million Positive outlook for gold price reflected in corporate strategy 5
Q2 2011 Financial Highlights � Inata cash cost of US$677/oz (Q1 2011: US$533/oz) � Lower tonnes treated � industrial action May � Lower head grade through plant, normalising to LoM grade � Higher variable costs � reagents, fuel, labour � EBITDA of US$26.1 million (Q1 2011: US$33.0 million) � Initial interim dividend of 2.1 pence/share declared � Payable to shareholders on record as at 9 September, and paid on 30 September 2011 � In line with new policy, dividends to be declared one third at interim and two thirds as final Strong EBITDA and cash position, despite cost pressures 6
Operational Highlights � Inata production of 39,423 oz (Q1 2011: 47,963 oz) � Tonnes processed declined to 586,000 (Q1 2011: 645,000) due to strike action and equipment availability � Recovered grade in Q2 of 2.24 (Q1 2011: 2.37) decreased towards LoM average � Inata plant continues to perform at above 287 tph capacity with high availability � Inata Resources increased to 2.12 million ounces in Q2 2011 � Continued development of the resource base within Tri-K in Guinea � South East Asian production of 23,380 oz at cash cost of US$1,015/oz (Q1 2011: 23,745 oz at cash cost of US$971) Inata production steady and exploration efforts continue to deliver 7
Gold Market Update 14000 1600 Gold Spot Price $/oz (L) 13500 US Dollar Index (R) 1400 13000 1200 12500 12000 USD Index Gold US$ 1000 11500 800 11000 10500 600 10000 400 9500 200 9000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 � Nominal highs continue to be reached - Eurozone debt fears, QE3, continued US$ weakness � Physical demand has remained strong throughout 2011, despite historical seasonality � Increasing levels of gold in government reserves � ICBC Gold Accumulation plan in China expected to lend support to long term demand � Inflation adjusted high of +US$2,100 considered within reach Short and long term fundamentals support gold price 8
Operational Review
Gold Mining in West Africa AVM Senegal Mali Burkina Faso AVM Guinea Sierra Leone Côte d � Ivoire Ghana Birimian geology Gold resources Liberia Country (km 2 ) (Moz) Ghana 45,000 110 Mali 124,000 33 Birimian volcanic rocks Guinea 27,000 12 Burkina Faso 60,000 12 Gold deposit Côte d'Ivoire 113,000 8 Senegal 6,000 3 Birimian greenstone 10
Gold Mining in Burkina Faso Essakane (IAMGold) Inata (Avocet) 135,900 oz 137,732 oz Mali Niger Taparko (High River) 127,684 Kalsaka (Cluff) 74,000 oz Ouagadougou Mana (Semafo) 179,700 oz Birimian greenstone Youga (Endeavour) 82,400 oz Gold deposit Ghana � Rapidly expanding mining sector � Only 1 gold mine operating in 2007 � 6 gold mines operational by 2010 Côte d � Ivoire � Mines produced over 700,000 ounces in 2010 � Over 30 listed gold producers and explorers 11 in country
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