UPDATE 2-Avocet Mining rules out share sale in fundraising drive
* Inata mine to yield 920,000 oz gold vs prior view of 1.85 mln oz
* Avocet in talks with Macquarie, other bankers
* 2012 EBITDA down 43 pct to $48.3 mln
* Gold production this year to be similar to 2012 level
* Cash costs to rise to $1,103/oz in 2013, from $1000/oz (Adds CEO comments, details on forecast; updates share move)
March 7 (Reuters) - West Africa-focused gold company Avocet Mining Plc said it was no longer considering selling equity to boost liquidity, after it found that reserves at its only producing mine were smaller than estimated.
Avocet said it was actively exploring a "non-equity solution" with Macquarie Bank - with which it has a hedging agreement - to restructure its finances, after talks with its major shareholders.
Chief Executive David Cather told Reuters that an equity offering was not preferred by the shareholders.
The company said on Thursday the ore reserves at Avocet's Inata mine in Burkina Faso are now estimated to yield 920,000 ounces of gold, down from 1.85 million ounces estimated earlier.
Avocet, which has several exploration projects in Burkina Faso and Guinea, said last month that a share issuance was one of the options being considered to raise funds.
The company had $8 million in hand at Dec. 31, apart from roughly $40 million held by Societe des Mines de Belahouro (SMB), the unit that operates the Inata mine.
The cash-in-hand was insufficient for planned expenses and Avocet was considering alternatives, including a restructuring of its hedging agreement with Macquarie or the feasibility of using the funds with SMB, the company said.
The forward sales hedging deal, which has an outstanding value of around $130 million, restricts Avocet from accessing surplus cash from SMB.
"Avocet is currently in advanced discussions with Macquarie Bank as well as other financiers," Cather said in a statement.
Avocet said on Thursday its core earnings fell 43 percent to $48.3 million in 2012.
Cash costs are expected to rise to $1,103 per ounce in 2013 from $1000 per ounce last year. Gold production at Inata was expected to remain little changed at 135,189 ounces.
Output, however, was estimated to decline annually to roughly 87,500 ounces by 2016 when mining will cease at Inata.
Cather, who became CEO in July, has been looking at preserving cash and scrapped Avocet's dividend for the year.
Avocet's shares have fallen more than 80 percent since June when it slashed its output targets at Inata.
The stock was down nearly 5 percent at 24.34 pence on the London Stock Exchange at 1149 GMT, valuing the company at less than 50 million pounds ($75 million). ($1 = 0.6643 British pounds) (Reporting by Brenton Cordeiro in Bangalore; Editing by Joyjeet Das)
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