Avocet Mining warns it could be broken up as it struggles to pay debt

SHARES in West African gold miner, Avocet Mining, were under pressure after it warned earlier in the day that it could be broken up amid crippling debt, said Reuters.

The company, which debuted on the London Stock Exchange in 2007 at 1,200 pence a share, has lost nearly all of its value and was trading at 9.9 pence. The stock was the largest percentage loser on the exchange, said the newswire.

Avocet has insufficient funds to pay capital and interest on a loan to Elliott, its largest shareholder. “A possible outcome of these discussions could be that the Avocet Group is broken up further in an orderly manner and eventually wound up,” it said.

Avocet has relied primarily on loans from Elliott since 2014 due to cash flow shortages resulting from a fall in gold prices and lower production at its Inata mine in Burkina Faso. It sold its assets in Burkina Faso for $5m to Ghana-based Balaji Group last year.

Avocet is relying on the success of its Tri-K project in Guinea where it completed a feasibility study indicating about 1.1 million ounces of gold, said Reuters.