Avocet Mining PLC Prospectus December 2011

Avocet Mining PLC
West African Projects
4.18.2 Operating Costs
The operating costs for the Inata mine to June 2011 were US$1.51 per tonne mined and
US$26.56 per tonne milled for processing and administration. RPA considers that the June
YTD costs have been negatively impacted by ongoing work in the plant aimed at increasing
the through put. Other costs attributed to the start‐up and teething have been incurred in
the plant and administration areas, the unit costs were also higher due to the lower than
forecast tonnage milled in the first six months of 2011.
The forecast operating costs are detailed in Table 36.
Table 36 Historical and planned operational costs for Inata mine
Operational Cost Estimate
Unit LOM Plan June 2011 YTD
Mining US$/t 1.51 1.51
Processing US$/t 14.59 15.97
Administration US$/t 8.25 10.29
4.19 Economic Analysis
4.19.1 Key assumptions
4.19.1.1 Valuation basis
The life of mine (LOM) and economic analysis presented here differ in certain key respects
from those that might be presented by management as its intended plan of operation. In
particular, the LOM and economic analysis of the LOM model presented in this report here is
based solely on the Ore Reserves which have been estimated using a gold price of US$1,200
per ounces. They therefore exclude Inferred Mineral Resources within the pits, whereas
these are commonly included in management LOMs on the basis that such ore is economic
at market consensus prices. Other differences include mine sequencing and optimisation, as
the LOM and economic analysis presented here are not necessarily optimised to best exploit
the Mineral Resource and Ore Reserve base at Inata.
4.19.1.2 Gold price
As gold is the main product of the Company, Avocet Mining is exposed to both short term
and cyclical variations. The valuation model is based on forecast price of the gold. Spot gold
price assumptions are based on the average forecast price on Bloomberg as of Friday 2 nd
December 2011. Using this consensus, a spot gold price of US$ 1,745 per ounce has been
used in 2012, US$ 1,847 per ounce in 2013 and declining from US$ 1,492 per ounce in 2014,
to US$ 1,450 and US$ 1,400 in 2015 and 2016 respectively. A flat price of US$ 1,200 per
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