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Avocet Mining seeking up to US$14M to extend life of Inata gold mine

Avocet Mining Plc on Feb. 2 unveiled an updated life-of-mine plan for its Inata gold mine in Burkina Faso that will extend the mine's operations to the end of 2019. The company is seeking US$11 million to US$14 million to fund the expansion.

The company completed a desktop scoping study, which indicated that the development of the Souma, Pali and Ouzeni satellite deposits could add a further six to seven years to Inata's mine life and increase production by up to 600,000 ounces of gold.

Avocet noted that the life-of-mine plan, at current gold prices, remains unlikely to enable the full repayment of creditors without the addition of new deposits. The company also flagged ongoing challenges at the mine, including cash flow constraints, security issues and mechanical availability.

CapEx of approximately US$10 million to US$12 million is required for the Souma deposit, including US$5 million to US$7 million to complete drilling, a feasibility study and a new mining permit application. Upon securing approval, Avocet estimates that Souma will need US$5 million in CapEx, mainly for haulage roads and enhancements to the comminution circuit at the Inata plant.

For the Pali and Ouzeni deposits, CapEx is pegged at US$1 million to US$2 million, primarily for drilling aimed at upgrading resources to reserves. The company hopes to extend the Inata mining permit to include the two deposits.

The updated plan includes an updated reserves estimate for Inata, effective Dec. 31, 2016. Proven and probable reserves, along with run-of-mine stockpiles, contain 340,400 ounces of gold within 5.8 million tonnes grading 1.84 g/t of gold.

Reserves increased by 105,300 ounces as compared to the previous estimate, driven primarily by a higher gold price assumption, the identification of additional resources at the Minfo deposit and improved recoveries assumed in the treatment of carbonaceous ore.

Inata is expected to produce 75,000 ounces to 85,000 ounces of gold in 2017, with cash costs of US$900 per ounce to US$1,000 per ounce.