Avesoro turnaround strategy to start bearing fruit this year

JOHANNESBURG (miningweekly.com) – In “a year of transition”, dual-listed Avesoro Resources has posted revenues of $63.6-million for the year ended December 31, generated from gold sales of 50 264 oz at an average realised price of $1 266/oz.

“While the period was challenging for the company, the new leadership team [introduced in the third quarter] achieved significant progress during the latter stages of the financial year, with strong improvements in performance across the entire operation. Operational and financial improvements have already taken place during the first quarter of this year,” said CEO Serhan Umurhan.

The company embarked on a turnaround process at its New Liberty mine, in Liberia, in the third quarter of last year, producing 63 556 oz for the year, up 73% on the prior year.

However, the tough conditions still reflected in the company’s financial results, with Avesoro reporting an underlying loss before interest, taxes, depreciation and amortisation of $30.4-million, adjusted for nonroutine transactions for the year.

The company further reported a net loss after tax of $113-million, predominantly from a $42-million impairment charge on New Liberty owing to the operational issues experienced throughout 2016.

Avesoro has strengthened its balance sheet, with principal debt having reduced to $97.6-million, following its first principal repayment of $12.4-million in December 2016.

Looking ahead, Avesoro expects further reductions in mining costs, owing to the establishment of an on-site explosives production facility and an increase in total material movement, as well as a decline in the operating cost base as a result of ongoing operational improvements and additional in-sourcing of New Liberty’s supply chain.

Avesoro expects to produce 90 000 oz to 100 000 oz of gold, at a cash cost of $750/oz to $800/oz, this year.

There will also be greater focus on near-mine exploration, with a $5-million near-mine exploration programme scheduled to start in the second half of the year.