Companies: AVM   

As foreshadowed here, Avocet Mining has signed an agreement to earn 36 per cent of China's 912,600-oz Hatu gold project.

The agreement allows AIM-quoted Avocet to earn up to 36 per cent of the project in Xinjiang Province by investing between £445,000 and £1 million in the development of Hatu. Last year, SRK Consulting attributed an inferred gold resource of 16.8 million tonnes at a low grade of 1.68 grammes of gold per tonne of ore to Hatu.

Chief executive John Catchpole has reached this agreement with Avocet's joint venture partner, Toronto Venture Exchange-quoted Dynasty Gold, in which Avocet has a 26 per cent holding with an agreement to up this to 31 per cent. Dynasty can lift its Hatu stake to 80 per cent, cutting Avocet's stake to 20 per cent, by spending £6.6 million and has already spent £1.6 million.

The agreement entitles Avocet to negotiate further interests in the Hatu property until September 30 next year. It also gives the company first refusal on any new projects Dynasty negotiates in Xinjiang Province.

Avocet shares, recommended by Growth Company Investor at 76.5p in May 2005, have now reached 176.75p, up 2.75p today to value the company at £215 million. Consider partial profit-taking but hold on to some for further potential gains.

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