Avocet profit falls 58 pct, scraps dividend

Wed Aug 1, 2012 9:40am BST

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Aug 1 (Reuters) - West Africa-focused Avocet Mining Plc said its second-quarter profit more than halved and that it would not pay a dividend this year.

Avocet, which has only one producing gold mine in Burkina Faso, said production fell 16.5 percent to 32,917 ounces.

However, mining rates would benefit from additional rented equipment and recoveries are expected to be above current levels for the rest of 2012 and into 2013 as mill feed comprises a higher proportion of oxide material, Avocet said.

"The upper ores in the orebody are close to surface and have been weathered. It just makes the gold easier to recover," Chief Executive David Cather told Reuters.

Avocet cut its production outlook for the full year in June, citing equipment availability issues and lower recoveries and processing rates at its flagship Inata mine, and raised cost forecasts.

"The market should take comfort in the operational improvements and upcoming cushion in the balance sheet," Numis Securities' analyst Cailey Barker said.

The miner, which appointed Cather as CEO last month, said pretax profit from continuing operations, excluding certain items, fell to $2.5 million from $5.9 million a year earlier.

Cash costs rose to $1,006 per ounce from $677 per ounce a year earlier.

Avocet shares, which have halved in value since the company cut its production forecast in June, were up 5 percent at 78.82 pence at 0830 GMT on Wednesday on the London Stock Exchange. (Reporting by Brenton Cordeiro in Bangalore; Editing by Don Sebastian)

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