Avocet faces uncertain future due to £30m debt
Avocet Mining saw its share price dive on Monday after the company warned that its future hinged on talks with its major lender and largest shareholder.
Avocet Mining
13.10p
16:30 30/04/19
Mining
10,662.18
17:14 18/04/24
The company said its near-$30m worth of loans, which have been due since 2013, represent “an unsustainable debt burden”, though Avocet has sufficient funds for at least the next twelve months at the current and expected rate of spending.
“A possible outcome of these discussions could be that the Avocet Group is broken up further in an orderly manner and eventually wound up. If this occurs, it is expected that, given the amount of debt owed by Avocet, there will be very minimal or no returns to Avocet's shareholders,” Avocet said in a statement.
The London-listed company also reported a 66% reduction in loss before tax to £1.9m after it disposed of its subsidiaries in Burkina Faso and its wholly owned Norwegian entity Wega Mining.
However, taking into account these disposals, the company raked in £25.2m over the course of the latest six-month stretch.
Now, Avocet’s sole remaining asset is its stake in the Tri-K gold exploration project in Guinea, of which it sold 70% to Casablanca-listed Moroccan mining group Managem.
The company had cash and cash equivalents of £1.8m at 30 June, up from approximately nil at the same point last year.
Avocet’s shares were down 37.32% at 7.49p at 1608 BST.