Operational issues and lower production at both its African gold mines negatively impacted on TSX- and Aim-listed Avesoro Resources’ financial performance in the third quarter ended September 30, pushing the miner into a loss.
It reported a loss before interest, taxes, depreciation and amortisation of $4.7-million for the quarter under review, compared with earnings before interest, taxes, depreciation and amortisation of $2.1-million in the second quarter of the year.
The company’s majority shareholder Murathan Gunal noted in a statement on Thursday that he would continue to provide financial support, as the company requires, for continued operation, while the effects of transitioning to contractor mining and other cost saving initiatives normalise.
The company still expects to produce between 140 000 oz and 145 000 oz of gold from its New Liberty and Youga gold mines, in Liberia and Burkina Faso, respectively, for the full year.
The mines produced 22 678 oz in the third quarter, which was 34% lower than the 34 338 oz produced in the second quarter, as a result of interruptions at both mines.
At Youga, additional mining and auxiliary equipment brought by the mining contractor arrived in October and was expected to improve mining productivity during the last quarter of this year. However, the company said gold production and unit cost performance would continue to be impacted on by low-grade ore from the Zergore pit.
In October, New Liberty experienced a pit wall and ramp failure on the north side of the Kinjor-east pit. Mining operations continued at the Marvoe and Kinjor-south pits, but ore production would be reduced, and unit cost underperformance was expected during the fourth quarter as a result.
Higher waste stripping was expected in the short term, as access to the Kinjor pit remained restricted, to complete the final openpit pushback.
Avesoro continued to work on the New Liberty underground definitive feasibility study and the start of underground development remained on track for the first half of 2020.
Meanwhile, in mid-October, major shareholder Avesoro Jersey Limited formally started an insider bid to acquire all of the issued and outstanding shares of the company, other than shares owned by it already, at a price of £1 apiece.
Subsequently, the board of directors filed a directors’ circular recommending that minority shareholders accept the offer.