The Inata Gold Mine 1 Inata management team General Manager Inata - - PowerPoint PPT Presentation

The Inata Gold Mine

1

Inata management team

2

General Manager Inata Gold Mine Colin Belshaw

Deputy GM and Projects Manager Bob Voisey Mining Manager Michel Labbe Maintenance Manager Frans Gonsalves Environment and Community Manager Nick Shirley Safety and Training Manager Terry Wilhelm Security Manager Daniel Gagnon General Services Manager Sharon Kell Finance Manager Guy Riopel Technical Services Kell Monro Geology Manager Alex Hagan

Chronology of Inata Project

2009 – present Avocet Mining PLC Step-out drilling commenced

April 2009 announced takeover of Wega in all-share deal June 2009 acquisition completed First gold pour in December 2009 and commercial completion by March 2010

2007-2009 Wega Mining ASA No drilling at Inata

Acquired Goldbelt Resources in 2007 for C$130 million in cash Entered US$65 million project finance facility agreement with MBL

2004 – 2007 Goldbelt Resources Ltd 69,000m

TSX-V listed Acquired properties in January 2004 for cash and shares worth US$6.5 million Outlined reserves and resources of 0.944 Moz and 1.7 Moz respectively

1998 – 2004 BHP - Resolute Ltd Joint Venture Metres drilled: 49,000m

Joint venture with BHP (1998-2001) Resolute sole operator until 2004 Resolute outlined 750,000 oz resource 3

Inata 2010 – A very successful year!

4

• 91,524 oz poured in initial 9 months
• First gold produced December ’09 – 152oz
• Production (poured) of 40,461oz Q3 ‘10
• Gold now sold at hedge and spot prices
• Ramp up to name plate thru’put (285tph)

achieved Sept 2010 (and showing potential for greater capacity)

• Plant recoveries currently >93%
• Commercial production planned for by Q3
• 2010. Actually achieved from 1st April 2010
• Set to produce over 120,000 oz in 2010

1 NI 43-101-compliant Reserves as of 31 August 2010 2 NI 43-101-compliant Resources as of 30 June 2010

AVM Ownership 90% Location Burkina Faso Reserves (oz) 1 1,081,500 Resources (oz) 2 1,310,700 Production (oz pa) 2010

• c. 120,000

LoM

• c. 165,000

Cash costs ($/oz) LoM 525-575 Plant feed grade (g/t) LoM 2.12 Estimated Mine Life (years) 7+

Inata – progress and YTD performance

• Extensive rectification work by

Avocet post June ‘09 acquisition of Wega Mining – ore to mills 28th November 2009

• De-bottlenecking completed

October 2010

• Recoveries as planned at 93%+
• YTD feed grade of 2.65gpt
• Mined tonnages reconciling well

with BFS resource model

5

2010 – Other achievements and milestones

• Successful Inauguration by the Prime Minister, His Excellency

Mr Tertius Zongo

• Increased Resources and Reserves
• Set up Geology and Exploration facilities on site – teams

working closely with each other

• Improved Chart of Accounts and management accounting
• Completed numerous infrastructure projects incl. Gendarmerie

6

Inata North Pit

7

Geological Settings and Prospectivity

• Deposit hosted in Birimian

greenstone belt of volcano- sedimentary series

• Folded metasediments and
• void granites intrusives
• Gold mineralisation commonly

associated with quartz–sulphide veining along sheared zones and contacts of volcanic intrusives

8 Avocet Mining INATA 1.8 Moz Au

VTEM Map Of Inata Prospect

Ore Deposit – Mineralization Style

9

• Generally NE trending fold axial plane

structures

• Extensive weathering and lateritisation of

the mineralisation and surrounding host rocks, resulting in oxide mineralisation up to 100 m depth

• Mineralization associated and\or in close

proximity to the graphitic shales, quartz veins and sulphides

• Simple structural domain at deposit scale

N

s

Reserve Potential

• Mineralization open both

along strike and at depth

• Grade improves with

depth

• Good correlation

between Resource Model and Grade Control Model

• Revision of Grade

Control Processes Ongoing

INATA NORTH _SECTION 1588475N

0.3 – 0.7 g/t Au 0.7 – 2.0 g/t Au > 2.0 g/t Au

Grade Control Processes

A section along 1588392N showing the GC model with the GC RC drill holes A plan view of 285mRL showing mining

• utlines from the GC model
• Robust, wide and continuous ore body

being delineated from the Grade Control modelling.

• Mining outlines wide and well defined

Reconciliation - GC and Resource Model

INATA NORTH GRADE CONTROL RESOURCE MODEL-NEW RL Tonnes Grade Ounces Tonnes Grade Ounces TOTAL INSITU ORE 285-282,5 63,049 3.35 6,786 63,074 2.88 5,841 282,5-280 63,693 3.17 6,502 63,514 2.85 5,830 280-277,5 63,693 3.06 6,269 62,124 2.96 5,917 277,5-275 63,322 3.01 6,121 61,967 2.95 5,885 275-272,5 59,117 3.01 5,722 56,472 3.03 5,510 272,5-270 57,902 2.87 5,348 56,429 3.03 5,502 GRAND TOTAL 370,776 3.08 36,748 363,580 2.95 34,485 ORE GRADE PROPORTIONS MARGINAL ORE 11% 16% 2% 5% 19% 1% LOW GRADE ORE 32% 43% 14% 29% 44% 13% HIGH GRADE ORE 58% 147% 85% 66% 131% 86% VARIANCE 2% 4% 7%

• Revision of

Grade Control Processes Ongoing

• Good

reconciliation between GC Model Mined and Resource Model

• Positive

reconciliation being observed

Reconciliation Resource, Mine Production vs Processing

• Good reconciliation

between Mined and Resource Model

• Good reconciliation

between Mining and Processing head grade and Ounces

13

2011 – Inata Processing Plant

14

Inata - increasing production capacity

15

• Forecast gold production for Inata life of mine

increased to 165,000 ounces p.a. from 120,000 ounces p.a.:

• Capital required: US$25 million
• Mining equipment: US$15 million
• 1 x PC2000 excavator
• 5 x 777F dump trucks
• 1x 988H wheel loader
• 1 x D9R dozer
• 1 x L8 blast hole rig
• Plant upgrade: US$10 million
• 2nd elution circuit and electro-winning cells
• Upgrade CIL inter-tank screens and piping
• Upgrade lime supply system
• Expand gold room
• Extra raw water and process water pumps
• Dust collection systems – crusher and reclaim
• CIL tanks oxygen supply system

The 3rd Mine Fleet

16

A Third Mine Fleet of value US$15M is required for the following reasons, both of which represent opportunities created by successful resource development and plant expansion:

• Exploit the new Inata Resource Model completed August 2010

−235,000 oz additional Ore Reserve announced September −Evaluation of economic pits completed, new designed pits −Ore Reserve increased as a result, 25% increase to 1.08M oz −LOM waste to ore strip ratio increased from 7:1 to 9:1 as a result of deeper pits

• Enable the expansion of existing Inata plant

−Increase from 285t/hr to 340t/hr −Reduce % of annual production that is hedged from ~70% to 55% −Increase spot price exposure at time of increased gold prices

Expanding the plant

• Planning for expansion of processing

capacity has been progressing since July

• Processing plant reached nameplate

capacity of 285 tph in August as planned and has run steadily since

• Expanding capacity by fully utilising

installed milling capacity and further debottlenecking to reach target of 340 tph by July 2011

17

Increasing mining capacity

18

Mining equipment

• Existing mining fleet:

− Excavator: 1 x PC2000 2 x PC1250 − Production Loader:1 x WA 800H − ROM Loader: 1 x 988H − Dump Trucks: 6x 777F 6 x HD785-7 − Track Dozer: 1 x D9R 1 x 375A − Wheel Dozer: 1 x 834H − Grader: 1 x 16M 1 x GD825A − Water Truck: 2 x HD475-7

− Blast Hole Drill Rig: Atlas Copco L8

− RC Drill Rig: Atlas Copco L8

• Ordered 3rd mining fleet:

− Excavator: 1 x PC2000 − Dump Trucks: 5 x 777F − ROM Loader: 1 x 988H − Dozer: 1 x D9R − Blast hole drill rig: Atlas Copco L8

19

Life of mine plan

• Current life of mine plan outlines the following:
• 7 year initial mine life, subject to ore body

extensions and/or additional greenfields discoveries

• Overall strip ratio of 9.4 (rising from 6.5 in 2010

to 12.7 in 2011/2012, declining thereafter)

• Expanded plant capacity of 2.7 Mt p.a.
• LoM plant feed grade of 2.12 g/t
• Budgeted recoveries of 90-95%; currently

>93%

20

Mining schedule

• Optimisation of pit designs and LOM schedule
• Schedule focuses initially on higher grade

Inata North pit

• Mining fleet performing as budgeted
• Mining in 2.5 m flitches to reduce dilution
• Currently achieving 920k BCM per month
• Production to increase to 1.3M BCM per

month with arrival of 3rd fleet Q3 2011

• Large stockpile of ore maintained on ROM
• Stockpile of 500,000 tonnes at +2.05 g/t (as
• f 30 November ‘10)
• Mining from Inata North and Central Starter

Pits

21

Inata North Sayouba Inata Central Inata South

Mining challenges and opportunities

• Operator training
• Mining is new to Burkina Faso
• Lack of skilled operators
• Optimise drill and blast operations
• Minimising dilution and ore loss
• Resource model performing well
• Diesel consumption per tonne and

tyre wear lower than expected

22

Plant key components

• 7 x 1.8 MW (de-rated) Generators
• 1 x 110 kW Primary Crusher
• 1 x SAG Mill
• 2 x Ball Mills
• 1 x Cyclo-Pac (20 cyclones)
• 6 x 1980 m3 CIL Tanks
• 1 x Falcon Concentrator
• Installation progressing

23

Process flow chart

24

Gomde barrage

• Capacity of 120 Mm3
• Current monthly usage of 0.3 Mm3
• Evaporation in dry season accounts for 5.2 Mm3 per month

25

Inata Cost Structure and Cost Drivers

• Diesel - price set by government in FCFA (current equivalent – US$0.81/litre); sourced from Benin
• Reagents – principally cyanide, lime and grinding media; synergies in supply with S.E. Asian operations
• Labour – high initial requirement for expats, declining in subsequent years
• Presently employing 501 nationals (105 local area) and 49 expats
• . LoM cash costs of US$525-575/oz (incl. government royalties)

26 Diesel 22% Reagents 12% Maintenance Consumables

• Plant

10% Maintenance Consumables

• Mine

18% Contractors & Consultants 6% Labour - Expatriate 11% Labour - National 8% Others 13% Adimistration 30% Mine 32% Process 38%

Key Operating Cost Drivers

• Fuel usage and cost
• Cyanide usage and cost
• Labour
• Strip ratio
• Planned maintenance schedules
• Grade
• Royalties
• Scale of operations

27

Focus on incremental operational cost savings

• Change to Junior staff accommodation policy
• Change to bulk explosives
• Change to SAG mill lifter design
• Reengineering of high wear areas of plant
• Move to in house services for environmental assays, grade control drilling

etc

• Reduction of 3rd party rental equipment such as craneage, backhoes etc
• Negotiation of consignment stock agreements

28

An Excellent Safety Record

• Occupational Health, Safety & Environment Committees
• First meeting held in May with the Committees being comprised of

representatives from all departments and management

• Committees meet once per month to review health and safety issues
• Emergency Response Team
• In May, 2009 SMB developed an Emergency Response Team. The

team is comprised of representatives from every department. They train four hours per week in all aspects of rescue; first aid, fire extinguishment, spill response, confined space rescue and embankment rescue.

• Achievements
• In December 2009 SMB worked 1 Million man hours without a Loss Time

Injury (LTI)

• In June, 2010 SMB worked 2 Million man hours consecutively without a

LTI

• On September 30th SMB worked 3 Million man hours

consecutively without a LTI

Environment Programmes

30

• Implementation of Environment Management Systems for SMB
• Development of:
• Operational and system procedures
• Impact and Aspects Register for all mining activities
• National and International Environmental Legal Register
• Conducting regulatory reporting regarding environmental

management and control

• Establishment of on-site waste management program, and

local recycling projects in the community

• Establishment of formal monitoring and control programs for

water, air and soil discharges

• On going reforestation and restoration programmes
• On going environmental training for employees

• Launch of the „Foundation Avocet Pour Le

Burkina‟ “FAB”

• Investment in projects that have directly benefited

the local communities including:

• Road systems
• Improvement of medical centres
• Village water supply
• Improvements in mobile communication
• Emphasis with regards to local recruitment by SMB

and contractors

• Developing local business opportunities in the

impacted region

• SMB holds regular Local and Regional Committee

Meetings to maintain close links with the mine and the communities

Community Relations – Projects

31

In Conclusion

32

2010 Goals and Achievements

 Skilled management team with diverse worldwide mining experiences  Safety culture  Completed construction  De-bottlenecking and commissioning  Mining on schedule  Implemented AccPac financial software  Motivated national team  Effective community relations  Gomde barrage water storage  Potential to outperform resource model and extend mine life via resource

development

 Potential to expand plant capacity

P P P P P P P P P

33

P P

2011 Goals

• Maintain safety record
• Successfully implement expansion plans and achieve production targets
• Continue incremental cost saving initiatives
• Successfully complete current drilling program with resultant resource

increase

• Redesign mine plan based on new resource model to increase reserves

whilst also providing greater operational flexibility and smoothed waste mining profile

• Build on AVM’s capacity in West Africa by development of Regional Office in

Ouagadougou utilising synergies between SMB and the exploration entities

34

Inata – upside potential

• Only main zone modelled
• Significant mineralisation outside of model
• At depth
• Parallel zones (in pit)
• Along strike

35

And final thoughts

• Inata successfully operating

above nameplate capacity

• Skilled management team with

diverse worldwide mining experiences

• Production and exploration upside

substantially greater than expected – already being exploited

36

www.avocet.co.uk Cautionary note

DISCLAIMER

• The information contained in this confidential document ("Presentation") has been prepared by Avocet Mining PLC (the "Company").

This Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000 and therefore it is being delivered for information purposes only to a very limited number of persons and companies who are persons who have professional experience in matters relating to investments and who fall within the category of person set out in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or are high net worth companies within the meaning set out in Article 49 of the Order or are otherwise permitted to receive it. Any other person who receives this Presentation should not rely or act upon it. By accepting this Presentation, the recipient represents and warrants that they are a person who falls within the above description of persons entitled to receive the Presentation.

• While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors,
• fficers, agents, employees or advisers give, have given or have authority to give, any representations or warranties (express or

implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or

• f any other written or oral information made or to be made available to any interested party or its advisers (all such information being

referred to as "Information") and liability therefore is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the Information

• r for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the

use of this Presentation.

• Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company

to proceed with any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent.

37