Avocet shares spike as it agrees funding and hedge restructure

SHARES in miner Avocet soared yesterday as it agreed a financing deal to stabilise its balance sheet.

Africa-focused Avocet said it had secured financing from bank Macquarie as well as a loan from its largest shareholder Elliott Management, which guarantees funding for the company’s two growth projects this year – Souma and Tri-K.

The $15m (£9.8m) loan from Elliott, which owns 27 per cent of Avocet, will be used to fund general corporate activity and a feasibility study at the Tri-K project.

Gold miner Avocet, which has its primary assets in Burkina Faso and Guinea, will also buy back 29,000 hedged gold ounces – representing 17 per cent of the total – for $20m in a deal agreed with Macquarie.

It will accelerate the buy back of the remaining hedged gold ounces, reducing the position to around 100,000 ounces by the end of 2013 and eliminating it completely in the next three years, Avocet said.

Additionally, changes to the terms for Avocet’s cash-generative Inata mine agreed with Macquarie will free up cash.

“By the end of 2013 the company will have clearly demonstrated the significant value to be realised from its portfolio of quality assets,” chief executive David Cather said.

Avocet shares closed up 9.33 per cent yesterday at 20.50p.