P. D. A. C. Mining Conference – Toronto, Ontario, Canada March 6 – 9, 2011 Metro Toronto Convention Centre
Cautionary note 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
Corporate overview Largest shareholders Market statistics* OSE & AIM - AVM 218.0 p o Elliott 13.1 % Market capitalisation US$698.7m o Datum 12.4 % Shares outstanding 197.5m o JP Morgan 9.7 % Cash (31.01.11) US$51.7m o BlackRock 7.7 % Net debt (31.01.11) US$26.3m Enterprise value US$725.0m Directors Share price performance (12 months) o Russell Edey, Chairman o Harald Arnet 265 o Mike Donoghue 240 o Robert Pilkington 215 o Barry Rourke 190 o Brett Richards, CEO 165 o Mike Norris, Finance Director 140 115 Exco 90 o Brett Richards 65 o Mike Norris 40 Feb-2010 May-2010 Aug-2010 Nov-2010 Feb-2011 o Peter Flindell AVOCET MINING GOLD FTSE GOLD MINES o Richard Gray o Hans-Arne L‟orange * All figures as of 18.02.11, unless otherwise stated 3
Q4 2010 operational highlights Q4 Group gold production of 70,857 oz • Includes Inata production of 46,208 oz at a cash cost of US$511/oz 2010 full year production of 236,396 oz • Exceeded 2010 full year production guidance of 220,000 oz • 166% increase from previous year (2009: 109,548 oz) • 2010 Group cash cost: US$660/oz (2009: US$639/oz) Inata plant expansion announced • LoM average production increase from 120,000 to 165,000 oz p.a. • US$25m of new capital in 2011 comprised of US$15m for third mining fleet and US$10m for plant upgrades Accelerated exploration programme initiated • 561,100 oz initial resource announced at Souma in Q4 2010 • 200,000 m drilling campaign at Inata and surrounding Bélahouro district • Guinea: VTEM survey plus 100,000 m of drilling commenced in Q4 2010 4
Financial summary Cash and net Project finance Corporate Gold hedge debt facility facility • Cash at bank of • US$65m project • 348,801 oz, at an • US$25m corporate US$49.5m 1 average US$970/oz 1 revolving credit finance facility with Macquarie Bank facility with Standard Chartered Bank, fully • Net debt of • Hedge delivery drawn • Outstanding US$28.5m 1 schedule of ~25,000 balance 1 : US$53m oz per quarter - commenced Q3 2010 • Repayment schedule of US$6m per quarter 5 1 As of 31 December 2010
Avocet in West Africa: 2010 achievements Commissioned Inata plant and ramp up to full production Increased resources Increased reserves and extend mine life Identified larger mineralised structures within Bélahouro district Commenced accelerated exploration programmes in Bélahouro Announced maiden resource estimate at Souma Trend Commissioned second mining fleet at Inata Initiated drilling programs on multiple projects in Guinea Further increase Inata‟s reserves Commission third mining fleet Commission plant upgrades to enable LOM +165,000 oz p.a. plus surge Guinean exploration: complete VTEM survey to identify drill targets 6
Strategic direction and outlook Maximising value from • Conditional sale announced 24 December 2010 South East Asian • Cash consideration of US$200 million upon completion • Completion expected in Q2 2011 assets • Resources and reserves updated in Q3 2010 Realising and growing • On track for target of doubling Inata reserves by Q3 2011 the potential of Inata • Increase in plant capacity announced • 200,000 m drilling in and around Inata mining licence Accelerated organic • Drilling commenced at Tri-K & Balandougou growth in West Africa • Regular exploration updates in 2011 Ready and prepared • Continued review of M&A landscape in West Africa • Explorer and producer valuations in West Africa to act on value adding irregularly calibrated at the moment acquisitions • Regular drilling results throughout the year • Completion of sale of South East Asian assets (Q2) • Resource and reserve reports at Inata (Q2, Q3), News flow in 2011 Koulékoun (Q2) and Balandougou (Q3) • Feasibility stage project within the Tri-K district (Q4) 7
Inata: transforming the Company • Successful production ramp up, 700,000 Ore tonnes processed per quarter 600,000 completed in Q3 2010 Ore tonnes processed 500,000 • Production to increase from 137,732 oz 400,000 in 2010 to 165,000 oz in 2011 300,000 200,000 • Cash costs competitive relative to West 100,000 African producers - • Gold recoveries remain above Q1 2010 Q2 2010 Q3 2010 Q4 2010 Actual tonnage processed expectation at 93-95% Current nameplate capacity (2.25 Mt p.a.) Gold production per quarter Cash costs versus guidance 50,000 580 Gold ounces produced 40,000 560 Cash costs per ounce 30,000 540 520 20,000 500 10,000 480 - 460 Q1 2010 Q2 2010 Q3 2010 Q4 2010 * Q2 2010 Q3 2010 Q4 2010 Actual gold production Inata cash costs Initial target: 120,000 oz p.a. equivalent Inata cost guidance (lower limit) Revised target: 165,000 oz p.a. equivalent 8 Inata cost guidance (upper limit) 8 * Includes US$2.7m adjustment to reflect a government decree on 31 December 2010 that government royalties for 2010 should be charged at 3% rather than 5%
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