Reuters: Hot Stocks: Avocet sticks to guidance but cost worries spook shares

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Avocet sticks to guidance but cost worries spook shares May 2nd 2013, 07:58 LONDON | Thu May 2, 2013 3:58am EDT LONDON May 2 (Reuters) - Concerns about cash burn and a weak gold price outweighed broadly in-line first quarter gold production at West-Africa focused Avocet Mining, dragging its shares to near record lows on Thursday. At 0730 GMT, Avocet shares were trading down more than 10 percent at 15 pence. The miner said it produced 30,481 ounces at its Inata mine in Burkina Faso in the quarter, marginally down from 30,909 in the previous quarter, at a cash cost of $1,169 per ounce, down from the last three months of 2012. It confirmed its full-year guidance of 135,000 ounces. "Although production was 7 percent above our estimate and cash costs were 7 percent below our forecast, the company... remains in a challenging position with all-in costs estimated to be above the peer group average at $1,400/oz in 2013," Canaccord analyst Tim Dudley said in a note. That compares to a current spot gold price around $1,455. "We estimate all-in costs over the next 3 years to average $1,456 per ounce, the second highest in our coverage and above $1,189 per ounce peer average," Dudley said. In the first quarter, cash outflow from operating activities hit $15.4 million. Avocet, which has several projects in Burkina Faso and Guinea, saw its shares tumble earlier this year and was forced to battle to stabilise its finances this quarter after cutting the reserves estimate at its sole operating mine, Inata. In March it struck a deal to fund two key projects and reduce an unfavourable forward sale deal. Link this Share this Digg this Email Reprints

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