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UPDATE 1-Gold miner Avocet to consider insolvency for Burkina Faso unit
September 4, 2017 / 7:12 AM / 3 months ago

UPDATE 1-Gold miner Avocet to consider insolvency for Burkina Faso unit

(Adds details, shares)

Sept 4 (Reuters) - Avocet Mining said on Monday its subsidiary Societe des Mines de Belahouro (SMB), which operates the Inata gold mine in Burkina Faso, may file for insolvency after a loan repayment freeze with its creditors expired.

The boards of SMB and Avocet will meet on Sept. 8 to consider “all available options, including the potential filing of an insolvency petition by SMB”, Avocet said in a statement.

SMB’s financial and trade creditors could not agree among themselves on an extension of the so-called standstill agreement, the company said.

Avocet shares fell more than 7.5 percent to 34.25 pence in early trading.

“Given the current status of discussions, it is unclear whether agreement on a restructuring of the balance sheet can be reached before SMB has exhausted all available sources of financing,” the company said.

In Burkina Faso, the company owns 90 percent of the Inata Gold Mine that produced 72,485 ounces of gold in 2016.

Avocet is struggling to keep the mine operating after former workers seized a shipment of gold last year. Its shares have dropped 35 percent this year.

The West Africa-focused company named Boudewijn Wentink as its new chief executive officer in April as it seeks to refinance and restructure the business. (Reporting by Rahul B in Bengaluru; Editing by Jason Neely and Mark Potter)

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