LONDON (ShareCast) - Shares in West Africa-focused Avocet Mining (LSE: AVM.L - news) fell sharply after the company published an update of mining activities at its Inata mineral reserve in northern Burkina Faso.
The company reported that test work indicated that the ore body at the facility was "more complex than had previously been believed".
While further analysis continues, the group said that current indications were that the impact of fresh and transitional ore on recoveries and throughput meant that the new Mineral Reserve would be likely to be between 0.9 and 1.2m ounces as of December 31st.
This compares to the previous mineral reserve of 1.85m ounces as of December 31st 2011.
The company added that the December 31st reserve figure was net of depletion during 2012 of approximately 160,000 ounces.
Mineral reserve reduction at Inata is "likely to result in a significant non-cash impairment, to be determined once the Mineral Reserve is finalised," the group further disclosed.
Hedge arrangements under discussion
"Avocet believes that in order to increase cash flow generation at Inata and maximise funds returned from SMB to finance corporate activities and support the company's investment plans at other projects it is necessary to reduce the hedge book substantially as soon as possible."
Avocet's share price was down 43.69% to 29p at 10:38 on Thursday.