Reuters: Hot Stocks: UPDATE 1-Avocet says in talks to restructure funding

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UPDATE 1-Avocet says in talks to restructure funding Mar 7th 2013, 08:26 Thu Mar 7, 2013 3:26am EST * Inata to yield 920,000 oz vs prior view of 1.85 mln oz * Avocet in talks with Macquarie, other bankers * 2012 EBITDA down 43 pct to $48.3 mln * Shares fall about 14 pct (Adds details on Macquarie agreement, background; updates share move) March 7 (Reuters) - West Africa-focused gold company Avocet Mining Plc said it was in talks with its banks, including Macquarie Bank, to restructure its finances after it found that reserves at its only producing mine were smaller than estimated. Avocet shares were down nearly 14 percent at 22.2 pence on the London Stock Exchange in early trading, valuing the company at less than 50 million pounds ($75 million). 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 said it had $8 million of funds at Dec. 31, apart from funds held by Societe des Mines de Belahouro (SMB), the unit that operates the Inata mine. That amount is insufficient for planned corporate and exploration activities, said the company, which has several exploration projects in Burkina Faso and Guinea. Restrictions imposed by a hedging agreement with Macquarie Bank do not allow Avocet to access surplus cash from SMB. "Avocet is currently in advanced discussions with Macquarie Bank as well as other financiers and we anticipate that announcements in relation to the nature of this restructuring will be made soon," CEO David Cather said in a statement. Avocet has a forward sales hedging agreement with Macquarie that has an outstanding value of around $130 million. The company said last month that it plans to restructure the hedging deal by buying back part or all of the hedging agreement to save on the costs of maintaining it. Avocet said on Thursday its core earnings fell 43 percent to $48.3 million in 2012. The gold miner's stock has fallen more than 80 percent since June when it slashed its output targets at Inata for 2012 and 2013. Cather, who became CEO in July, has been looking at preserving cash and scrapped Avocet's dividend for the year. ($1 = 0.6643 British pounds) (Reporting by Brenton Cordeiro in Bangalore; Editing by Joyjeet Das) Link this Share this Digg this Email Reprints

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