JOHANNESBURG (miningweekly.com) – LSE-listed Avocet Mining’s shares fell by 24.5% from 83.12p a share at Friday’s close to 62.75p apiece on Monday morning, following the news that a gold shipment containing about 1 400 oz from the Inata gold mine, in Burkina Faso, had been seized.
Bailiffs acting on behalf of former employees of Société des Mines de Bélahouro (SMB), who had been laid off following an illegal strike in December 2014, had seizured the shipment.
Avocet, which owns 90% of SMB, which, in turn, owns the Inata mine, said in a statement on Monday that the legal basis for the seizure was, according to representatives of the former employees, a number of unpaid benefits which remain outstanding.
Although a court upheld their claim that elements of pay were due, the amount has yet to be determined by a court, and SMB management believe that any amount would be considerably less than the $3.4-million claimed by the representatives of the former employees.
SMB has maintained that the seizure itself was illegal and, although SMB management had hoped to have the seizure removed earlier, a court hearing was scheduled for Monday at which the lifting of the seizure would be requested.
No gold shipments will be made until SMB is certain that they will not again be intercepted by bailiffs. Following the hearing, a decision is expected within two weeks.
SMB management have advised workers and the government that if this matter cannot be resolved promptly, and cash cannot be realised from gold sales to pay for running costs of the mine, management will need to consider temporary cessation of operations.
If such a cessation is necessary, production will be impacted and no payments will be possible to suppliers or workers until the matter is resolved.
If the cessation continues for a prolonged period, it may mean that the mine cannot be restarted without significant investment, if at all, and may have a material adverse effect on SMB's financial position.
If SMB is unable to provide funds for head office and corporate costs before receipt of proceeds in connection with the sale of the Tri-K gold project, in Guinea, to Moroccan mining group Managem, which is expected to take place before the end of the year, the company will need to find alternative sources of funding, which are expected to be about $100 000 to $200 000 a month.