Avocet Mining lowers guidance and discusses further fundraising

Shares in Avocet Mining fell after the FTSE Fledgeling company lowered its full year gold guidance and said it would need to raise more cash to fund working capital, with September's foiled military coup in Burkina Faso having also affecting recent shipments.

Gold production for the third quarter fell to 17,517 oz from 22,848 ounces unearthed in the second, while cash costs escalated to $1,107 per oz in the third quarter from $952 in the second.

Avocet said production declined principally due to lower gold grades of 1.50 grammes per tonne compared with 2.27 g/t in the second quarter.

Full year gold production for 2015 is now expected to be 70-75,000 oz, down from the 75-80,000 oz guidance given at the half year, which was also lowered from earlier.

While the loan facility from an affiliate of Avocet's largest shareholder, Elliott Associates, is now expected to last longer than the end of the month "through prudent cash management", working capital was now said to be "limited" and management believes it will need to raise further funding in the near term. "Discussions are ongoing in this regard".

The outcome of an arbitration hearing with J&Partners, the buyer of Avocet's South East Asian assets in 2011, is now expected to be delivered in November, which could if favourable, entitle Avocet to a portion of its $1.8m cost claim.

"An unfavourable outcome may expose the company to a cost claim from the claimants of up to $4.2m," Avocet said, adding that it has been advised that "it has a better than evens chance of success in the arbitration".

Nevertheless, shares in the company were down 20% to 2.71p by 1105 on Thursday.