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MINING | Avesoro Resources

Completing a turnaround in Liberia and expanding into Burkina Faso


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AVESORO RESOURCES


MINING | Avesoro Resources

On May 10th, West Africafocused gold miner Avesoro Resources published a glowing financial update, with gold production and sales more than trebling in the first quarter of 2018, which helped quarterly revenue rise to US$91.4 million. This incredible figure represents more than 90% of the full year 2017 revenue of $98 million reported by the company in March, after it was able to complete a successful turnaround at the New Liberty Gold Mine in Liberia. Avesoro’s annual performance was also bolstered by the acquisition of two producing gold mines in Burkina Faso, which combined with the revival of New Liberty to create a positive spiral in the company’s fortunes, propelling it towards mid-tier status.

industry, after achieving first marketable

“We are delighted with the continued strong

introducing a number of initiatives to boost

operational performance delivered in the

operations at the mine.

production as recently as March 2016. However, dark clouds were quick to form around Liberia’s inaugural large-scale gold mine. Just two months after reaching full production, Avesoro (then operating under the name Aureus Mining) was forced to suspend operations at New Liberty amid commissioning delays and a tailings leak, which was exacerbated by a deteriorating financial position and retreating gold prices.

A timely intervention It was at this point that Turkish gold miner MNG Gold swooped in to arrest the company’s decline, signing a deal to become the majority shareholder of Aureus and providing a cash injection totalling $150 million to rescue the New Liberty mine, before renaming the company Avesoro. After refreshing the boardroom with several appointments from MNG’s team, Avesoro commenced a new strategy for New Liberty,

first quarter,” says Avesoro’s CEO and director Serhan Umurhan.

“Primary amongst these was the decision to transition to an owner-operator mining

“All of our mines performed in line with

model, which significantly reduced the

expectations, leaving us on track to meet

ongoing costs of mining operations. We also

2018 production guidance. We go forward in

purchased additional fleet to allow for an

2018 from a position of strength.”

increased mining rate and to catch up on the stripping shortfall the company inherited.”

New Liberty is the first and largest commercial gold mine in Liberia’s fledgling

Furthermore, Avesoro has improved


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MINING | Avesoro Resources

All of our mines performed in line with expectations, leaving us on track to meet 2018 production guidance. We go forward in 2018 from a position of strength.” Serhan Umurhan, CEO and director equipment availability, recruited additional

However, fast forward to Avesoro’s Q1 2018

high-quality staff for both the mining

production report and irrefutable evidence

operation and process plant, undertaken

emerges of the turnaround at New Liberty.

a proactive maintenance schedule and optimised the process plant allowing for

The mine produced a record quarterly gold

an increased throughput from 90ktpm to

output of 27,870 ounces (oz), a 9% increase

140ktpm.

on the production sum achieved in the previous three-month period at the end of

Factor in improved tailings and surface water 2017. management and the result is a stable and profitable mine, which was not much more

Addressing the size of the task the company

than a far-fetched dream back in mid-2016.

had on its hands, Umurhan says: “It has


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undoubtedly been challenging, but we knew

The next challenge for Avesoro at New

there was a quality asset here and that we

Liberty is to continue delivering high

had the capabilities within the team to bring

standards in line with the company’s renewed

it into stable production.

mine plan and production targets. However, the miner has also devised plans to extend

“As the most recent record production results the LOM at New Liberty. have shown, we have succeeded in achieving that. I would like to thank all our staff who

“We have a lot of inferred gold ounces below

have shown great determination in bringing

the pit shell that are not currently included

about this result.”

within the mine plan and have just completed a 52-hole drill programme with the aim of


MINING | Avesoro Resources

increasing the confidence level in these

from the Youga and Balogo gold mines in

ounces, with extremely encouraging results

Burkina Faso during the first quarter of the

to date confirming the resource model.”

year, with the combined production figure of both mines increasing by 39% on the last

The results of this drilling programme will be

quarter to 40,218 oz.

combined with near mine exploration that is currently underway. “2018 is an exciting

This is an impressive result considering

year for exploration across the whole group,”

Avesoro purchased the mines only

reveals Umurhan.

last year in what the company called a

Welcome to Burkina Faso Avesoro also delivered strong output growth

‘transformational’ move, in the sense that it gives them the chance to grow their portfolio and expand their geographic reach in the West Africa region.


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In particular, Avesoro was able to apply its

“To date, the average mined grade from

skills at the Youga mine to deliver the highest

Balogo has been approximately 18 grams per

quarterly production from the process plant

tonne (g/t) and during the quarter this has

in a decade and has already extended the

fed through to the process plant, with the

mine life and devised a more cost-effective

feed grade for the quarter increasing by 37%

mining process.

to 4.5 g/t.�

The Balogo mine is also held in high regard

Youga and Balogo are proven gold-producing

by the company despite its previous owner

assets that complement the New Liberty

struggling to raise the necessary finance

mine and provide an instant boost to

that would reflect its true potential. Avesoro

Avesoro’s production portfolio, in addition to

began mining the high-grade asset in March

adding high quality exploration upside that

2017.


MINING | Avesoro Resources

will provide further organic growth in the

“We will continue to focus on delivering

future.

on our production guidance through 2018 whilst also assessing various other M&A

Taking into account the additional output

opportunities.

from the Youga and Balogo mines, Avesoro’s total Q1 production figure came to 68,088 oz,

“We have a very strong platform to grow from

which represents an all-time high return and

both organically and by acquisition.”

keeps the company on track to meet its 2018 guidance of between 220,000 oz to 240,000

A golden horizon

oz.

Umurhan also has a reasonable right to believe that external market conditions

“Our primary ambition is to become a

will further sweeten the fruits of success

premier mid-tier gold producer and that

born out of Avesoro’s increased operational

ultimately means we have to reach 500,000

productivity.

oz [annual production rate] and the acquisition of Youga and Balogo has been a

Gold is widely considered a ‘safe haven’

significant first step in reaching that target,”

commodity and will continue to be perceived

Umurhan proclaims.

in this way by investors long into the future.


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Interest in gold as a portfolio buffer also

After completing a turnaround at New Liberty

peaks during times of geopolitical tension or

and bolstering its production portfolio with

upheaval and this is when gold spot prices

the two Burkina Faso acquisitions, Avesoro is

tend to rise, which is only good news for

well on the way to a golden horizon.

international gold mining companies, and Avesoro’s CEO and director expects gold

In the short term, the company is confident

to rise in the face of escalating tensions

it can soon reach a 300,000 oz annual

between the world’s two largest economies.

production target through organic growth and exploration across its three mines, but in

“President Trump’s foreign policy and the

the long term it will look to achieve a 500,000

current brewing trade war with China have

oz annual guidance through M&A activity and

increased political instability and uncertainty

is currently assessing various opportunities

in these regions and we are seeing investors

throughout the continent.

turn to gold as a traditional haven.”

AIM:ASO TSX:ASO

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Published by Anderson Murray Media Ltd

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