Burkina Faso – Inata

In late June 2009, Avocet completed the recommended, share for share, acquisition of Wega Mining ASA (‘Wega’). The main asset of Wega is the 90% owned Inata project in Northern Burkina Faso.

Following the first gold pour in December 2009, the project is currently ramping-up production towards a rate of 120,000 ounces per annum by mid-2010.  Regular updates on gold production at Inata will be provided by the Company as the mine progresses through to full production.  As announced on the 29 January, Inata produced 3,200 ounces during January 2010, and is currently progressing ahead of schedule.

The current life of mine (‘LOM’) plan has determined an operation that will produce at least 120,000 ounces of gold annually over an initial 7 year mine life. Current NI 43-101-compliant mineral resources at Inata are 1,694,000 ounces of gold and the current ore reserves at Inata stand at 944,000 ounces. It is anticipated that additional gold resources from nine exploration licences surrounding the 26 km2 Inata mining permit will be defined in due course for incorporation into the LOM plan.  Now that the project is in production, Avocet has recommenced exploration activities on the prospective tenements that surround the Inata mill.

The gold mineralisation at Inata can be traced over a continuous 4 km strike length and occurs within silicified volcaniclastic rocks, porphyries and vein quartz that occur within a large shear zone. The 944,000 ounces of proven and probable reserves will be mined from three principal pit areas: Inata North, Central and South. Three smaller pits will be developed during the life of the project.

Under previous ownership, geological modeling and resource estimation was completed by Ravensgate Consultants of Perth, Australia. George, Orr & Associates also of Perth, Australia provided crucial geotechnical information to enable the pits to be designed which were completed by Orelogy of Perth, Australia.  Orelogy also completed all reserve estimation and mine costings.  Tailings facility management, water dam and other mine infrastructure was carried out by AMEC and Wardell Armstrong International and metallurgical testwork was completed by AMMTEC of Perth, Australia.

Mineral Reserves - Proven - Probable - Reserves subtotal		Gross Tonnes__   4,472,000__ 10,952,000__ 15,424,000__ Grade (g/t)––   2.30__ 1.70__ 1.90__ Contained–– Ounces––   329,000__ 615,000__ 944,000__		Net attributable (90%) Tonnes__   4,020,800__ 9,860,800__ 13,881,600__ Grade (g/t)––   2.30__ 1.70__ 1.90__ Contained–– Ounces––   296,200__ 553,000__ 849,200__
Mineral Resources Measured Indicated Measured + Indicated Inferred Resources subtotal		5,217,100__ 19,843,260__ 25,060,360__ 7,095,900__ 31,156,260__   2.30__ 1.60__ 1.75__ 1.30__ 1.65__   378,480__ 1,018,450__ 1,396,930__ 297,910__ 1,694,840__		4,695,000__ 17,858,900__ 22,554,300__ 6,386,300__ 28,940,600__   2.30__ 1.60__ 1.75__ 1.30__ 1.65__   340,600__ 916,600__ 1,257,200__ 268,100__ 1,525,300__

Reserves were calculated at a 0.8 gpt Au cut-off and a stock pile is developed for all low grade ore (0.5 – 0.8 gpt Au)
that will be processed towards the end of the mine’s life.

Conventional drilling, blasting, loading and hauling will be deployed during the mining of each pit through a sequential life-of-mine plan that has been determined from physical properties of the orebodies, the equipment in use and the economics that govern the profitability of the mining. The majority of the ore is soft oxide that will not require blasting. Less than 5% of the existing reserves are contained in fresh rock.

A 12.6 MW power station from Connell Mining Products Ltd and the Komatsu owner-operator mining fleet comprising 6 Komatsu 785s (100-tonne haulage trucks), 1 Komatsu PC2000 excavator (200-tonne shovel), 1 Komatsu PC1250 (120 tonne excavator) and 1 Tamrock D25 blast-hole drill are on site. The mining fleet and processing plant are both operational 24 hours a day, 7 days a week.

The Inata project will employ around 300 staff when in full production, most of which will be recruited from within Burkina Faso.

The plant will have a milling capacity of 2.25 Mtpa and has a SAG mill and two ball mills in the circuit. Initial ore production will bypass the SAG mill. The results from metallurgical testwork of the ore indicated that conventional CIL with a gravity recovery circuit will achieve recoveries of around 90% Au over the life of the mine. Leach kinetics demonstrated that the ore was relatively insensitive to grind size of the ore and good recoveries were achieved at a grind of 80% passing 106 µm. A conservative approach was employed in the process design and a grind of 80% passing 75 µm was selected.

Water for the project is supplied by a 100 million cubic meter water reservoir - the Gomde Barrage. The current capacity held in the dam equates to substantially more water than required for annual consumption for the project and will also represent a stable supply of water for the local communities, a major benefit which has built strong social support for the project. Additional subterranean water sources have been discovered close to Inata that will be used for potable consumption and excess plant water.

Macquarie Bank was mandated as the lead financial institution for the senior debt facility of USD 65m. As part of the project finance facility, the Company is required to forward gold sales of 400,000 ounces at an average price of US$970/oz.  Sales of gold into the hedge position are not due to commence until September 2010, and hence all gold production prior to that date will be at market prices.

Avocet, Wega and previous owners of the Inata project, have worked closely with the Burkina Faso Government in many areas of the project to make sure that the project is sustainable not just as a viable gold project, but as a sustainable business for the people and communities within the local area. Sustainable social initiatives such as medical assistance and schooling will be a clear mandate to improve the lives of people in the areas in which the Company operates.