Avocet Mining PLC Prospectus December 2011

c105718pu010 Proof 5: 7.12.11_13:34 B/L Revision:
RISK FACTORS
Any investment in the Ordinary Shares is speculative and involves a high degree of risk. In addition to
the other information contained in this Prospectus, prospective subscribers for Ordinary Shares should
consider carefully the specific risks set out below before making a decision to invest in Ordinary Shares.
These risks and uncertainties may not be the only ones facing Avocet Mining. Additional risks and
uncertainties not presently known to Avocet Mining or that Avocet Mining currently deems immaterial
may also have a material adverse effect on Avocet Mining’s business, results of operations and financial
condition. If any, or a combination, of these risks actually occurs, Avocet Mining’s business, results of
operations and financial condition could be materially adversely affected. If this occurs, the trading price
of the Ordinary Shares could decline and investors could lose part or all of their investment. The
Ordinary Shares carry no guarantee in respect of profitability, dividends, return of capital or the price at
which they may trade and investors could lose all or part of their investment. The order in which the
following risk factors are presented does not necessarily reflect the likelihood of their occurrence or the
relative magnitude of their potential material adverse effect on Avocet Mining’s business, results of
operations and financial condition.
1. Risks relating to the gold mining industry
The Company is exposed to a number of risks and hazards typically associated with gold mining
Avocet Mining’s mining operation at Inata, Burkina Faso, is subject to the risks and hazards
normally encountered in open pit mining operations, many of which are outside the Company’s
control. Avocet Mining may also develop other mines in West Africa and extend its operations to
underground mines in the future. The risks and hazards involved in the drilling and removal of
material could adversely affect the development or continuation of Avocet Mining’s mining
operations. Such risks include, but are not limited to, pit slope failure, adverse weather conditions
and flooding. On 1 December 2011, Avocet Mining became a signatory to the ICMC as it transports,
processes and stores cyanide for use at certain of its sites. Whilst companies that adopt the ICMC
must have their mining operations that use cyanide audited by an independent third party, this does
not eliminate the risk of cyanide spillage or seepage in areas where such spillages or seepages could
damage or harm the public and/or the environment. All of these risks may adversely affect the
Company’s business, results of operations and financial condition.
The Company’s Mineral Resources and Ore Reserves are estimates based on a number of assumptions and
there can be no assurance that these will be achieved
The estimated mine life of Inata is approximately eight years calculated on the basis of existing Ore
Reserves and current production levels, extending to approximately 2020. Should the Company be
successful in expanding its production capacity to approximately 245,000 ounces per annum, the life
of mine would be reduced to approximately six years. To extend the mine life of Inata and ensure the
continued success of the business, Avocet Mining must continue to realise its existing identified Ore
Reserves and develop its operations by identifying additional Mineral Resources, undertaking
successful exploration and/or acquiring new mining operations. Whilst Avocet Mining has a drilling
programme underway in and around its existing mining licences which should allow for a significantly
extended mine life at Inata, and currently holds exploration licences in Burkina Faso, Guinea and
Mali, there can be no certainty that the Company will continue to maintain or realise the current
level of gold production.
Avocet Mining’s actual mined grades and tonnages may vary from the Company’s Mineral Resource
estimate and mine plans. Additionally, the metallurgical characteristics of ore bodies may vary
compared to those anticipated, and processing plant ore throughput and metal recoveries may be
below (or above) expectations, resulting in lower (or higher) than anticipated gold production and
knock-on effects on the business, results of operations and financial condition of the Company. There
are considerable uncertainties in estimating the size and value of Mineral Resources and Ore
Reserves. Avocet Mining reports its Mineral Resources and Ore Reserves in accordance with the
JORC Code. Under the requirements of this reporting standard, judgements about Mineral Resources
are made by the competent person in respect of the technical and economic factors likely to influence
the prospect of economic extraction, including the approximate mining parameters. The evaluation of
these factors may prove to be inaccurate, and reported Mineral Resources and Ore Reserves may be
adjusted downward or upward resulting in a material adverse impact on Avocet Mining’s business,
results of operations and financial condition.
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