20 April 2017
Results for the 3 months ended
31 March 2017 (Unaudited)
Based on IFRS and expressed in US
Dollars (US$)
Acacia Mining plc (“Acacia’’) reports
first quarter results
“At an operational level Acacia had a very strong start to the
year, with production of 219,670 ounces delivered from our mines
and the declaration of a 1.3Moz maiden high grade resource in
Kenya”, said Brad Gordon,
Chief Executive Officer. ”North Mara delivered strong
production of 96,468 ounces, and it was pleasing to see the
significant step up at Buzwagi to 59,856 ounces in the quarter
whilst, as expected, Bulyanhulu had a slower start to the year with
production of 63,346 ounces. All-in Sustaining Cost per ounce sold
(AISC) was impacted by sales being almost 35,000 ounces lower than
production primarily due to the restriction on the export of
metallic mineral concentrates, but still amounted to US$934 per ounce sold (US$877 per ounce prior to the impact of
share-based payment valuations), 3% lower than Q1 2016. As
announced previously, we continue to engage with the Tanzanian
Government in order to be able to resume the export of gold/copper
concentrate which has been halted since 3rd March and
accounts for approximately 30% of group revenues. Whilst these
engagements are ongoing our mines continue to operate as normal and
are stockpiling the gold/copper concentrate that has been produced.
As a result, at this stage there is no change to guidance for the
year.”
Operational Highlights
- Gold production of 219,670 ounces, 15% higher than Q1 2016
- Gold sales of 184,744 ounces, in line with Q1 2016, but 34,926
ounces lower than production primarily as a result of the Tanzanian
Government’s directive stopping the export of metallic mineral
concentrate
- Cash cost1 of US$577
per ounce sold,17% lower than Q1 2016
- AISC1 of US$934 per
ounce sold, 3% below Q1 2016, after a US$56 per ounce share-based payment valuation
impact in Q1 2017
- For reference purposes, if Q1 sales ounces equalled Q1
production, AISC would have been approximately US$852 per ounce
- Buzwagi delivered production of 59,856 ounces, up 61% compared
to Q1 2016 with AISC decreasing to US$773 per ounce sold
- Maiden NI43-101 compliant Inferred Mineral Resource Estimate of
1.31 million ounces of gold at 12.1 grams per tonne declared on the
Liranda Corridor within the West Kenya Project
Financial Highlights
- Revenue of US$234 million, 6%
higher than Q1 2016, as increased production from North Mara and a
6% increase in gold price has offset the impact of lower revenue
from gold/copper concentrate sales
- EBITDA1 of US$82
million, 25% higher than Q1 2016, mainly due to slightly
higher revenues and lower direct mining costs
- Net earnings1 of US$27
million (US6.5 cents per share), up from a US$52 million loss in Q1 2016 and up 48% from Q1
2016 on an adjusted basis
- Declared first provisional corporate tax payment of
US$8.7 million for Q1 2017 due to
strong performance at North Mara
- Net cash decreased by US$22
million during Q1 2017 to US$196
million, due to sales lagging production and indirect tax
outflows
|
Three months ended 31 March |
|
Year
ended 31 Dec |
(Unaudited) |
2017 |
2016 |
|
2016 |
Gold
production (ounces) |
219,670 |
190,210 |
|
829,705 |
Gold
sold (ounces) |
184,744 |
184,181 |
|
816,743 |
Cash
cost (US$/ounce)1 |
577 |
693 |
|
640 |
AISC
(US$/ounce)1 |
934 |
959 |
|
958 |
Net
average realised gold price (US$/ounce)1 |
1,221 |
1,150 |
|
1,240 |
(in
US$'000) |
|
|
|
|
Revenue |
233,901 |
220,909 |
|
1,053,532 |
EBITDA
1 |
82,193 |
65,550 |
|
415,388 |
Adjusted EBITDA1 |
82,193 |
66,411 |
|
409,903 |
Net
earnings/(loss) |
26,827 |
(52,410) |
|
94,944 |
Basic
earnings/(loss) per share (EPS) (cents) |
6.5 |
(12.8) |
|
23.2 |
Adjusted net earnings1 |
26,827 |
18,109 |
|
161,021 |
Adjusted net earnings per share (AEPS) (cents)1 |
6.5 |
4.4 |
|
39.2 |
Cash
generated from operating activities |
25,224 |
52,232 |
|
317,976 |
Capital expenditure2 |
46,828 |
36,030 |
|
195,898 |
Cash
balance |
281,442 |
237,429 |
|
317,791 |
Total
borrowings |
85,200 |
113,600 |
|
99,400 |
1 These are non-IFRS measures. Refer to
page 15 for definitions 2 Excludes non-cash
capital adjustments (reclamation asset adjustments) and include
land purchases recognised as long term prepayments
Other Developments
Export of metallic mineral
concentrates
As previously announced, on 3 March
2017, the Ministry of Energy and Minerals of the Tanzanian
Government announced a general ban on the export of metallic
mineral concentrates following a directive made by the President of
the United Republic of Tanzania in
order to promote the creation of a domestic smelting industry.
Following the directive we ceased all exports of our gold/copper
concentrate (“concentrate”) including the 277 containers that had
been approved for export prior to the ban which are located in Dar
es Salaam at both the port and a staging warehouse.
The prevention of exports impacts
Bulyanhulu and Buzwagi which produce gold in both doré and in
concentrate form due to the mineralogy of the ore. North Mara is
unaffected due to 100% of its production being doré. In 2016, the
concentrate accounted for approximately 45% of Bulyanhulu’s
revenues and 55% of Buzwagi’s revenues and at the group level
accounted for approximately 30% of revenues. Acacia has been
exporting concentrate from Bulyanhulu since 2001 and from Buzwagi
since 2010 with all associated gold, copper and silver revenue
declared. Whilst the proportion of gold in the concentrate is less
than 0.02% it represents approximately 90% of the value of the
concentrate, with copper representing approximately 10% of the
value and silver less than 1%. Bulyanhulu and Buzwagi are permitted
under Tanzanian law to sell their concentrate products to overseas
customers and to export the concentrate in containers, and have
been in full compliance with these laws and their export
permits.
Since the directive we have engaged extensively with key
Government officials in order to come to a resolution that allows
for exports to resume. As a long term investor in Tanzania we are fully committed to supporting
local business and the Government’s goal of economic growth, wealth
creation and increased tax collection. To this end, we have offered
to support the Government in a new study by third party experts to
assess the economic potential of building a smelter in Tanzania capable of processing our concentrate
as well as looking for a solution that addresses related
issues.
In early April, a Presidential Committee was formed, made up of
academics and industry professionals, to investigate the contents
of the concentrate containers in various locations in Tanzania. This team is due to report back to
the President before the end of April and has visited both
Bulyanhulu and Buzwagi as part of the process. Subsequent to
quarter end, the President has formed a second committee to
consider economic and regulatory issues relating to the export of
metallic mineral concentrates from Tanzania.
Since the directive we have continued to operate at Bulyanhulu
and Buzwagi as normal and continue to stockpile concentrate at each
of the sites. We have done this whilst taking a range of actions to
help manage the significant financial impact of the deferral of
sales, whilst ensuring we continue to safely operate the mines. We
will re-assess the ongoing operation of Bulyanhulu and Buzwagi over
the coming weeks due to the importance of concentrate as revenue
for the two mines.
The impact of the ban during the quarter has meant that we have
approximately 30,000 ounces of gold in concentrate on hand, which
was produced but not yet sold. This has negatively impacted
cashflow by approximately US$33
million for the quarter. In addition we received
approximately US$22 million in
advanced payments for concentrate produced in January and February
which is currently held up in the Dar es Salaam port and was
awaiting export prior to the ban being announced. The advanced
payments may need to be refunded during the second quarter if the
export ban is not lifted. AISC was impacted on a unit cost basis,
and had we sold all of the ounces produced, AISC for the quarter
would have been approximately US$852
per ounce.
Declaration of maiden high-grade
Resource at West Kenya Project
During Q1 2017 we announced the maiden NI 43-101 compliant
Inferred Mineral Resource Estimate (MRE) on the Liranda Corridor,
within our West Kenya Project. The Inferred MRE of 3.46 million
tonnes at 12.1 grams per tonne for 1.31 million ounces is primarily
located on three main zones of mineralisation at the Acacia
prospect. The gold mineralisation at Acacia is associated with
shear zones ranging in width from 0.5 metres to 10 metres
(averaging 3 metres true width dependent on the zone), hosted by a
mafic volcanic sequence. The strike lengths of the explored
sections of the main mineralised zones at Acacia vary between 200
metres and 600 metres and the resource is currently defined down to
a vertical depth of 750 metres with the structures open down
plunge.
An initial programme of approximately 45,000 metres of diamond
core drilling is being undertaken during Q1-Q3 2017, with the
objective of significantly increasing the Acacia prospect Inferred
Resource, and at the same time producing an initial Inferred
Resource on the Bushiangala prospect. We are targeting a
significant increase in the Liranda Corridor Resource to over 2
million ounces prior to the end of 2017. We also plan to commence a
scoping study in H2 2017 to consider the potential for an
underground mining operation. To increase the testing of the
five main prospects in the Liranda Corridor we plan to increase the
number of drill rigs operating from six to eight.
Gokona Underground (North Mara)
technical review update
Due to the strong performance to date from the Gokona
Underground at North Mara we commenced a technical review in late
2016 to better understand the near term grade profile as well as
the longer term potential of the operation. This review is helping
to guide the extensive drilling programmes that are underway to
increase the life of the mine to at least 10 years. During the
first quarter this drilling was limited to drilling adjacent to the
defined stoping blocks at Gokona East Zone to test for continuity
of higher grade mineralisation to
the Gokona Fault. Several significant high grade intercepts were
returned including 9.0m @ 59.9g/t Au from 46.0m incl. 3m @ 204g/t
Au from 49m and 19.4m @ 64.7g/t Au from 37.0m incl. 2m @ 453g/t Au
from 45m.
During the quarter we updated the Mineral Resource model using
multiple indicator kriging (MIK) estimation methods to better
represent the higher grade zones. The long term planning team are
now evaluating this updated model, and reviewing the life of mine
designs and infrastructure requirements. This process will be
completed during the second quarter of 2017 and together with the
results from the drilling programmes will form part of the full
year reserve update process.
For 2017, we have re-assessed the current reserve model in the
East Zone and have applied a positive reconciliation factor of 26%
to the stopes in this year’s plan. This has therefore increased the
full year mined grade in Gokona East from 9.6g/t to 11.8g/t, which
includes ore development tonnes, and the overall mined grade
(including Gokona West) for 2017 is therefore expected to be
8.4g/t. Notwithstanding this, our expectations for production for
the year remain unchanged as we have also applied more conservative
mining rate and productivity assumptions based on our experience to
date and the rate of ramp up in both Gokona West and East.
Minimum local shareholding and listing
requirements for mining companies
On 7 October 2016, the Mining
(Minimum Shareholding and Public Offering) Regulations, 2016, made
by the Minister for Energy and Minerals, were published. The
Regulations impose two main obligations on holders of Special
Mining Licences (SMLs), namely a 30% minimum local shareholding
obligation and an obligation for SML holders to list on the Dar es
Salaam Stock Exchange (DSE). In their current form, these
Regulations require each of our operating entities that own
Bulyanhulu, Buzwagi and North Mara to individually list on the DSE
and offer 30% of their shares to Tanzanians for purchase. The
original deadline stipulated for such offers was within 2 years of
the date of the Regulations. However, we have been informed that
this deadline has now been accelerated to 23
August 2017. This follows similar legislation
introduced in Tanzania that
required all Telecommunications companies operating in the country
to be listed by 31 December 2016,
although none has yet completed this process.
In 2011, in an attempt to promote Tanzanian ownership, Acacia
Mining plc obtained a cross-listing (being a form of secondary
listing for foreign companies) on the DSE, further to commitments
made at the time of Acacia’s IPO in 2010. Whilst Acacia
supports the attempt to build capital markets in Tanzania and the promotion of local ownership,
we will be engaging with the Capital Markets and Security Authority
(CMSA), the DSE, the Ministry of Energy and Minerals and all other
relevant authorities in Tanzania
during the second quarter with a view to finding a route forward
that is both beneficial and practical for all stakeholders.
Taxation update
We have declared the first provisional corporate tax payment for
2017 relating to North Mara amounting to US$8.7 million. This has been offset against the
indirect tax receivable under the Memorandum of Settlement entered
into with the Tanzanian Government. During the quarter, we incurred
approximately US$25 million in VAT
outflows and received no VAT refunds. This was a result of the
Tanzanian Revenue Authority and the Ministry of Finance undertaking
audits of all VAT claims dating back to 2014. We believe that all
VAT claiming businesses are subject to this audit, which remains
ongoing. As a result, our total indirect tax receivables increased
from US$136 million to approximately
US$152 million during the quarter, of
which approximately US$32 million is
covered by the MOS, following the offset of North Mara corporate
tax mentioned above.
Resignation of Non-executive
Director
Peter Tomsett has informed the
Company that he plans to step down from the Acacia Board of
Directors following the Annual General Meeting later today due to
personal circumstances. Following this change, the Acacia Board
will comprise eight members, including 5 Independent Non-Executive
Directors, two Non-Executive Directors and one Executive Director.
Acacia will announce a replacement Senior Independent Director in
due course. Acacia would like to thank Peter for his valuable
commitment and support to the Company during his time on the Board
and wish him all the best for the future.
Key
Statistics |
|
Three months ended 31 March |
|
Year
ended 31 December |
(Unaudited) |
|
2017 |
2016 |
|
2016 |
Tonnes
mined |
Kt |
9,481 |
9,407 |
|
38,491 |
Ore
tonnes mined |
Kt |
3,216 |
2,445 |
|
9,419 |
Ore
tonnes processed |
Kt |
2,420 |
2,488 |
|
9,818 |
Process recovery rate exc. Tailings reclaim |
% |
93.4% |
89.6% |
|
92.3% |
Head
grade exc. tailings reclaim |
g/t |
3.5 |
3.0 |
|
3.3 |
Process recovery rate inc. tailings reclaim |
% |
89.8% |
88.9% |
|
88.5% |
Head
grade inc. tailings reclaim |
g/t |
3.1 |
2.8 |
|
3.0 |
Gold
production |
oz |
219,670 |
190,210 |
|
829,705 |
Gold
sold |
oz |
184,744 |
184,181 |
|
816,743 |
Copper
production |
Klbs |
4,656 |
3,803 |
|
16,239 |
Copper
sold |
Klbs |
2,487 |
3,681 |
|
14,745 |
Cash
cost per tonne milled exc. tailings reclaim1 |
US$/t |
51 |
59 |
|
62 |
Cash
cost per tonne milled inc. tailings reclaim1 |
US$/t |
44 |
51 |
|
53 |
Per
ounce data |
|
|
|
|
|
Average spot gold price2 |
US$/oz |
1,219 |
1,183 |
|
1,251 |
Net average realised gold
price1 |
US$/oz |
1,221 |
1,150 |
|
1,240 |
Total cash cost1 |
US$/oz |
577 |
693 |
|
640 |
All-in sustaining cost1 |
US$/oz |
934 |
959 |
|
958 |
Average realised copper price |
US$/lbs |
2.79 |
2.10 |
|
2.21 |
Financial results
|
Three months ended 31 March |
|
Year
ended 31 December |
(Unaudited, in US$'000 unless otherwise stated) |
2017 |
2016 |
|
2016 |
Revenue |
233,901 |
220,909 |
|
1,053,532 |
Cost
of sales |
(149,396) |
(171,900) |
|
(727,080) |
Gross
profit |
84,505 |
49,009 |
|
326,452 |
Corporate administration |
(6,642) |
(5,302) |
|
(21,895) |
Share
based payments |
(10,424) |
(3,938) |
|
(29,929) |
Exploration and evaluation costs |
(6,778) |
(5,951) |
|
(24,020) |
Corporate social responsibility expenses |
(2,195) |
(2,870) |
|
(10,665) |
Other
income (charges) |
(10,815) |
(608) |
|
11,649 |
Profit/(loss) before net finance expense and taxation |
47,651 |
30,340 |
|
251,592 |
Finance income |
597 |
293 |
|
1,512 |
Finance expense |
(2,238) |
(2,866) |
|
(11,047) |
Profit/(loss) before taxation |
46,010 |
27,767 |
|
242,057 |
Tax
credit/(expense) |
(19,183) |
(80,177) |
|
(147,113) |
Net
profit/(loss) for the year |
26,827 |
(52,410) |
|
94,944 |
1 These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to “Non IFRS measures”
on page 15 for definitions.
2 Reflect the London PM fix price.
For further information, please visit our website:
http://www.acaciamining.com/ or contact:
Acacia Mining plc |
+44 (0) 207 129 7150 |
Brad Gordon, Chief Executive
Officer
Andrew Wray, Chief Financial
Officer
Giles Blackham, Investor
Relations Manager
Bell Pottinger |
+44 (0) 203 772 2500 |
Lorna Cobbett
About Acacia Mining plc
Acacia Mining plc (LSE:ACA) is Tanzania’s largest gold miner and
one of the largest producers of gold in Africa. We have three producing mines, all
located in north-west Tanzania:
Bulyanhulu, Buzwagi, and North Mara and a portfolio of exploration
projects in Tanzania, Kenya, Burkina
Faso and Mali.
Our approach is focused on strengthening our core pillars; our
business, our people and our relationships, whilst continuing to
invest in our future. Our ambition is to create a leading African
Company.
Acacia is a UK public company headquartered in London. We are listed on the Main Market of
the London Stock Exchange with a secondary listing on the Dar es
Salaam Stock Exchange. Barrick Gold Corporation is our majority
shareholder. Acacia reports in US dollars and in accordance with
IFRS as adopted by the European Union, unless otherwise stated in
this report.
Conference call
A conference call will be held for analysts and investors on
20 April 2017 at 08:45 AM London time.
The access details for the conference call are as follows:
Participant dial
in: +44
20 3059 8125
Password:
Acacia Mining
A recording of the conference call will be made available on the
Company’s website, www.acaciamining.com, after the call.
FORWARD- LOOKING STATEMENTS
This report includes “forward-looking
statements” that express or imply expectations of future events or
results. Forward-looking statements are statements that are not
historical facts. These statements include, without limitation,
financial projections and estimates and their underlying
assumptions, statements regarding plans, objectives and
expectations with respect to future production, operations, costs,
projects, and statements regarding future performance.
Forward-looking statements are generally identified by the words
“plans,” “expects,” “anticipates,” “believes,” “intends,”
“estimates” and other similar expressions.
All forward-looking statements involve a number of risks,
uncertainties and other factors, many of which are beyond the
control of Acacia, which could cause actual results and
developments to differ materially from those expressed in, or
implied by, the forward-looking statements contained in this
report. Factors that could cause or contribute to differences
between the actual results, performance and achievements of
Acacia include, but are not limited to, changes or developments
in political, economic or business conditions or national or local
legislation or regulation in countries in which Acacia
conducts - or may in the future conduct - business, industry
trends, competition, fluctuations in the spot and forward price of
gold or certain other commodity prices (such as copper and diesel),
currency fluctuations (including the US dollar, South African rand,
Kenyan shilling and Tanzanian shilling exchange rates),
Acacia’s ability to successfully integrate acquisitions,
Acacia’s ability to recover its reserves or develop new
reserves, including its ability to convert its resources into
reserves and its mineral potential into resources or reserves, and
to process its mineral reserves successfully and in a timely
manner, Acacia‘s ability to complete land acquisitions
required to support its mining activities, operational or technical
difficulties which may occur in the context of mining activities,
delays and technical challenges associated with the completion of
projects, risk of trespass, theft and vandalism, changes in
Acacia‘s business strategy including, the ongoing implementation
of operational reviews, as well as risks and hazards associated
with the business of mineral exploration, development, mining and
production and risks and factors affecting the gold mining industry
in general. Although Acacia‘s management believes that the
expectations reflected in such forward-looking statements are
reasonable, Acacia cannot give assurances that such
statements will prove to be correct. Accordingly, investors should
not place reliance on forward-looking statements contained in this
report.
Any forward-looking statements in this report only reflect
information available at the time of preparation. Save as required
under the Market Abuse Regulation or otherwise under applicable
law, Acacia explicitly disclaims any obligation or
undertaking publicly to update or revise any forward-looking
statements in this report, whether as a result of new information,
future events or otherwise. Nothing in this report should be
construed as a profit forecast or estimate and no statement made
should be interpreted to mean that Acacia‘s profits or
earnings per share for any future period will necessarily match or
exceed the historical published profits or earnings per share of
Acacia.
Operating Review
Acacia delivered production of 219,670 in Q1 2017, an increase
of 15% compared to the prior year quarter, while AISC of
US$934 per ounce sold and cash cost
of US$577 per ounce sold were 3% and
17% respectively lower than Q1 2016. For reference purposes, if Q1
sales ounces equalled Q1 production, AISC would have been
approximately US$852 per ounce and
cash costs would have been approximately US$551 per ounce.
North Mara achieved gold production of 96,468 ounces for
the quarter, 29% higher than in Q1 2016. This was a result of a 31%
higher head grade driven by the higher contribution from the Gokona
underground mine and a resultant 3% improvement in recoveries. Gold
ounces sold for the quarter of 93,740 ounces were 26% higher than
the comparative quarter and broadly in line with production. AISC
for the quarter saw a slight decrease to US$717 per ounce sold (Q1 2016: US$737/oz) as a result of the impact of increased
sales volumes, partly offset by increased capitalised development
costs, higher sustaining capital expenditure and a higher drawdown
of ore inventory.
Bulyanhulu produced 63,346 gold ounces, 19% lower than
the comparative period but in line with plan. This was due to
ounces produced from underground mining decreasing by 22% over Q1
2016, driven by a reduction in both ore tonnes and head grade.
Lower underground mined grades were expected due to mine sequencing
with reduced access to higher grade stopes. AISC per ounce sold for
the quarter of US$1,229 was 25%
higher than Q1 2016 (US$983) mainly
driven by the impact of lower sales ounces due to the lower
production levels and the inability to export metallic mineral
concentrates and higher cash costs mainly driven by increased
external services.
At Buzwagi, gold production of 59,856 ounces was 62%
higher than Q1 2016 due to a 64% increase in head grade as a result
of higher grade delivered from the main ore zone at the bottom of
the pit, compared to a generally lower mine grade in Q1 2016 given
focus on waste movement in the first half of 2016. AISC for the
quarter of US$773 per ounce sold
decreased by 38% compared to Q1 2016, mainly driven by the higher
production base combined with lower sustaining capital expenditure,
despite the significant lag in sales against production.
Total tonnes mined during the quarter amounted to 9.5 million
tonnes, in line with Q1 2016, as a result of a 24% increase in
total tonnes mined at North Mara, offset by lower tonnes from
Bulyanhulu and Buzwagi. Ore tonnes mined of 3.2 million tonnes were
32% higher than Q1 2016 mainly due to higher ore tonnes from
Buzwagi as a result of increased access to ore zones in the open
pit in Q1 2017.
Ore tonnes processed amounted to 2.4 million tonnes, a decrease
of 3% on Q1 2016, resulting from marginally lower throughput at all
three sites. This was offset by a 11% increase in head grade
primarily driven by a 31% higher head grade at North Mara driven by
the higher contribution from the Gokona underground mine and a 64%
increase in head grade at Buzwagi as a result of higher grade ore
mined, driving production 15% higher compared to Q1 2016.
Cash costs of US$577 per ounce
sold for the quarter were 17% lower than in Q1 2016, primarily due
to:
- Higher production base (US$93/oz); and
- Higher capitalisation of development costs mainly at North Mara
due to higher waste stripping at Nyabirama Stage 4 and at
Bulyanhulu due to increased underground waste development activity
(US$49/oz); offset by
- Higher contracted services costs at Bulyanhulu due to increased
geology and contracted maintenance costs (US$40/oz).
Included in cash cost, and ultimately cost of sales, is a credit
of approximately US$15 million
(US$81/oz) relating to the build-up
in finished gold inventory due to concentrate sales delays which
largely offsets the impact of the reduction in sales ounces in the
cash cost per ounce sold calculation.
All-in sustaining cost of US$934
per ounce sold for the quarter was 3% lower than Q1 2016, despite
the lag in sales against production. This was driven by the lower
cash costs (US$116/oz) (refer to
above) partly offset by higher capitalised development costs at
both North Mara and Bulyanhulu (US$49/oz) and the impact of a higher revaluation
charge relating to future share-based payments compared to Q1 2016
(US$35/oz).
If our sales ounces equalled production, AISC for the quarter
would have been approximately US$852
per ounce sold, compared to US$924
per ounce sold on the same basis in Q1 2016, a decrease of 8%.
Cash generated from operating activities of US$25.2 million decreased by 52% from Q1 2016.
The inability to export our concentrate has had a negative impact
on operating cash flow of approximately US$33 million. Working capital outflows mainly
relating to increases in supplies inventory and indirect tax
receivables further impacted cash generated from operating
activities.
Capital expenditure amounted to US$46.8
million compared to US$36.0
million in Q1 2016. Capital expenditure primarily comprised
of capitalised development and stripping (US$33.9 million), investment in fixed equipment
and mining infrastructure mainly at Bulyanhulu (US$2.7 million), investment in mobile equipment
and component change-outs mainly at North Mara (US$1.7 million) and land purchases at North Mara
(US$1.2 million).
Mine Site Review
Bulyanhulu
Key statistics
|
|
Three months ended 31 March |
|
Year
ended 31 December |
(Unaudited) |
|
2017 |
2016 |
|
2016 |
Key operational
information: |
|
|
|
|
|
Ounces
produced |
oz |
63,346 |
78,426 |
|
289,432 |
Ounces
sold |
oz |
53,805 |
72,448 |
|
279,286 |
Cash
cost per ounce sold1 |
US$/oz |
786 |
661 |
|
722 |
AISC
per ounce sold1 |
US$/oz |
1,229 |
983 |
|
1,058 |
Copper
production |
Klbs |
1,498 |
1,817 |
|
6,391 |
Copper
sold |
Klbs |
956 |
1,580 |
|
5,570 |
Run-of-mine: |
|
|
|
|
|
Underground ore tonnes hoisted |
Kt |
205 |
243 |
|
909 |
Ore
milled |
Kt |
221 |
252 |
|
933 |
Head
grade |
g/t |
8.4 |
9.8 |
|
9.3 |
Mill
recovery |
% |
91.4% |
87.9% |
|
91.4% |
Ounces
produced |
oz |
54,256 |
69,776 |
|
254,552 |
Cash
cost per tonne milled1 |
US$/t |
171 |
174 |
|
197 |
Reprocessed
tailings: |
|
|
|
|
|
Ore
milled |
Kt |
413 |
378 |
|
1,650 |
Head
grade |
g/t |
1.4 |
1.5 |
|
1.4 |
Mill
recovery |
% |
47.5% |
46.1% |
|
45.8% |
Ounces
produced |
oz |
9,089 |
8,650 |
|
34,880 |
Capital
Expenditure |
|
|
|
|
|
- Sustaining capital |
US$('000) |
4,212 |
7,085 |
|
20,231 |
- Capitalised development |
US$('000) |
16,070 |
13,168 |
|
63,082 |
- Expansionary capital |
US$('000) |
478 |
194 |
|
1,262 |
|
|
20,760 |
20,447 |
|
84,575 |
- Non-cash
reclamation asset adjustments |
US$('000) |
1,042 |
4,214 |
|
10,728 |
Total capital
expenditure |
US$('000) |
21,802 |
24,661 |
|
95,303 |
1These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to ‘Non-IFRS measures”
on page 15 for definitions.
Operating performance
Gold production amounted to 63,346 ounces, which was 19% lower
than Q1 2016, but in line with plan. As guided, Q1 is expected to
be the weakest quarter in 2017 at Bulyanhulu due to the impact of
mine sequencing and lack of access to high grade stopes during the
quarter. Production during the quarter was comprised of 30,787
ounces of gold in concentrate and 32,559 ounces of gold in
doré.
Gold sold for the quarter of 53,805 ounces, was 15% lower than
production and 26% lower than Q1 2016 mainly as a result of the
lower production and the inability to export concentrate from early
March.
Copper production of 1.5 million pounds for the quarter was 18%
lower than Q1 2016 mainly driven by lower copper grades. Copper
sold was 40% lower than Q1 2016, primarily due to the lack of
exports of concentrate combined with lower copper production.
Cash costs of US$786 per ounce
sold were 19% higher than Q1 2016 (US$661), mainly due to the impact of lower sales
ounces on individual cost items combined with the lower production
base (US$137/oz) and higher
contracted services cost (US$90/oz),
partly offset by higher capitalised development costs driven by
higher waste development activity (US$43/oz) and lower sales related costs due to
lower sales volumes (US$34/oz).
Included in cash costs is a credit of approximately US$5.6 million (US$104/oz) relating to the build-up of finished
gold inventory as a result of concentrate sales delays.
AISC per ounce sold for the quarter of US$1,229 was 25% higher than Q1 2016 (US$983) driven by the impact of lower sales
ounces on individual cost items ($112/oz), higher cash costs ($125/oz) and higher capitalised development costs
(US$54/oz), partly offset by lower
sustaining capital expenditure ($53/oz).
Capital expenditure for the quarter before reclamation
adjustments amounted to US$20.8
million, in line with Q1 2016 (US$20.4 million), as a decrease in sustaining
capital expenditure (US$2.9 million)
was offset by an increase in capitalised development (US$2.9 million).
Capital expenditure mainly consisted of capitalised underground
development costs (US$16.1 million)
and investment in fixed equipment and mining infrastructure
including the West fan upgrade and underground ventilation raise
boring (US$2.3 million).
Buzwagi
Key statistics
|
|
Three months ended 31 March |
|
Year
ended 31 December |
(Unaudited) |
|
2017 |
2016 |
|
2016 |
Key operational
information: |
|
|
|
|
|
Ounces
produced |
oz |
59,856 |
37,063 |
|
161,830 |
Ounces
sold |
oz |
37,199 |
37,433 |
|
161,202 |
Cash
cost per ounce sold1 |
US$/oz |
694 |
1,171 |
|
1,031 |
AISC
per ounce sold1 |
US$/oz |
773 |
1,246 |
|
1,095 |
Copper
production |
Klbs |
3,158 |
1,985 |
|
9,847 |
Copper
sold |
Klbs |
1,531 |
2,100 |
|
9,175 |
Mining
information: |
|
|
|
|
|
Tonnes
mined |
Kt |
5,267 |
5,926 |
|
21,585 |
Ore
tonnes mined |
Kt |
2,053 |
1,303 |
|
5,317 |
Processing
information: |
|
|
|
|
|
Ore
milled |
Kt |
1,076 |
1,128 |
|
4,404 |
Head
grade |
g/t |
1.8 |
1.1 |
|
1.2 |
Mill
recovery |
% |
96.7% |
94.3% |
|
94.5% |
Cash
cost per tonne milled1 |
US$/t |
24 |
39 |
|
38 |
Capital
Expenditure |
|
|
|
|
|
- Sustaining capital |
US$('000) |
141 |
1,150 |
|
3,582 |
- Capitalised development |
US$('000) |
- |
- |
|
- |
|
|
141 |
1,150 |
|
3,582 |
- Non-cash
reclamation asset adjustments |
US$('000) |
(78) |
1,421 |
|
4,524 |
Total capital
expenditure |
US$('000) |
63 |
2,571 |
|
8,106 |
1These are non-IFRS
financial performance measures with no standard meaning under IFRS.
Refer to “Non-IFRS measures” on page 15 for definitions.
Operating performance
Gold production for the quarter of 59,856 ounces was 62% higher
than in Q1 2016 due to a 64% increase in head grade as a result of
higher grade ore mined from the main ore zone at the bottom of the
pit in Q1 2017 as a result of the focus on waste movement in the
first half of 2016. Production during the quarter was comprised of
40,002 ounces of gold in concentrate and 19,854 ounces of gold in
doré.
Gold sold for the quarter of 37,199 ounces, was 38% lower than
production and in line with Q1 2016, primarily due to the inability
to export concentrate from the beginning of March.
Copper production of 3.2 million pounds for the quarter was 59%
higher than the prior quarter period mainly due to increased copper
grades. Copper sales decreased by 27% mainly due to the
restrictions placed on the export of concentrate during the
quarter.
Cash costs for the year of US$694
per ounce sold were significantly lower than Q1 2016 (US$1,171/oz), primarily driven by the higher
production base (US$437/oz) and lower
realised gold hedge losses (US$52/oz). Included in cash costs is a credit of
approximately US$9.5 million
(US$255/oz) relating to the build-up
of finished gold inventory as a result of concentrate sales
delays.
AISC per ounce sold of US$773 was
38% lower than the Q1 2016 (US$1,246/oz). This was mainly driven by the lower
cash costs (US$477/oz) (refer to
above) combined with lower sustaining capital expenditure
($27/oz).
Capital expenditure before reclamation adjustments amounted to
US$0.1 million, 88% lower than Q1
2016 (US$1.2 million). Capital
expenditure for the quarter consisted of the corrosion treatment of
the process plant with the planned expansion of the tailings
storage facility not yet started.
North Mara
Key statistics
|
|
Three months ended 31 March |
|
Year
ended 31 December |
(Unaudited) |
|
2017 |
2016 |
|
2016 |
Key operational
information: |
|
|
|
|
|
Ounces
produced |
oz |
96,468 |
74,721 |
|
378,443 |
Ounces
sold |
oz |
93,740 |
74,300 |
|
376,255 |
Cash
cost per ounce sold1 |
US$/oz |
410 |
484 |
|
410 |
AISC
per ounce sold1 |
US$/oz |
717 |
737 |
|
733 |
Open pit: |
|
|
|
|
|
Tonnes
mined |
Kt |
3,854 |
3,114 |
|
15,556 |
Ore
tonnes mined |
Kt |
803 |
775 |
|
2,752 |
Mine
grade |
g/t |
2.8 |
1.6 |
|
1.9 |
Underground: |
|
|
|
|
|
Ore
tonnes trammed |
Kt |
154 |
125 |
|
440 |
Mine
grade |
g/t |
11.3 |
10.6 |
|
15.6 |
Processing
information: |
|
|
|
|
|
Ore
milled |
Kt |
710 |
731 |
|
2,830 |
Head
grade |
g/t |
4.6 |
3.5 |
|
4.5 |
Mill
recovery |
% |
92.6% |
90.2% |
|
92.0% |
Cash
cost per tonne milled1 |
US$/t |
54 |
49 |
|
55 |
Capital
Expenditure |
|
|
|
|
|
- Sustaining capital2 |
US$('000) |
6,256 |
2,378 |
|
28,317 |
- Capitalised development |
US$('000) |
17,797 |
11,655 |
|
75,609 |
- Expansionary capital |
US$('000) |
1,536 |
86 |
|
2,399 |
|
|
25,589 |
14,119 |
|
106,325 |
- Non-cash
reclamation asset adjustments |
US$('000) |
124 |
3,177 |
|
6,703 |
Total capital
expenditure |
US$('000) |
25,713 |
17,296 |
|
113,028 |
1These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to ‘Non-IFRS measures”
on page 15 for definitions.
2 Includes land purchases recognised as long term
prepayments.
Operating performance
North Mara achieved gold production of 96,468 ounces for the
quarter, 29% higher than in Q1 2016. This was primarily a result of
31% higher head grade driven by the higher contribution from the
Gokona underground mine and a resultant 3% improvement in
recoveries. Gold ounces sold for the quarter of 93,740 ounces were
26% higher than the prior year quarter and broadly in line with
production.
Cash costs of US$410 per ounce
sold were 15% lower than Q1 2016 (US$484), mainly driven by the higher production
base (US$58/oz) and higher
capitalisation of development costs due to higher waste stripping
at Nyabirama Stage 4 (US$76/oz),
partly offset by an increased drawdown of ore inventory compared to
Q1 2016 (US$35/oz).
AISC of US$717 per ounce sold was
3% lower than Q1 2016 (US$737/oz) as
a result of lower cash costs (US$74/oz) (refer above) and the impact of
increased sales volumes (US$52/oz),
partly offset by higher capitalised development costs (US$66/oz) and higher sustaining capital
expenditure (US$41/oz).
Capital expenditure for the quarter before reclamation
adjustments of US$25.6 million was
81% higher than in Q1 2016 (US$14.1
million). Key capital expenditure include capitalised
stripping costs (US$13.4 million),
capitalised underground development costs (US$4.4 million), capitalised drilling at
Nyabirama underground (US$1.5
million) and investment in mobile equipment and component
change-outs (US$1.2 million). In
addition, US$1.2 million was spent on
land acquisitions primarily around the Nyabirama open pit. Land
acquisition costs are included in capital expenditure above as they
are included in AISC but are treated as long term prepayments in
the balance sheet.
Exploration Review
Brownfield Exploration
Significant brownfield programmes and budgets were approved for
2017 for North Mara to undertake surface and underground drilling
activities at Gokona, Nyabirama, and Nyabigena. During the quarter
there was limited underground drilling at Bulyanhulu but there will
be a step up in drilling activity on the Reef 2 series through the
rest of the year.
North Mara
Nyabirama
The second stage of the surface diamond core drilling programme
adjacent to the Nyabirama pit was completed during the quarter, and
a subsequent programme of infill drilling was commenced. This
drilling has been successful in showing the down-dip and
down-plunge extension of higher grade quartz-vein lode structures
to a vertical depth of approximately 950 metres below surface and
approximately 800 metres down-plunge to the south-west of the
current open pit.
Results received during the quarter include:
-
NBD0147
3m @ 5.1 g/t Au from 397.0m
4m @ 9.1 g/t Au from 428.0m
-
NBD0149A
3m @ 66.6 g/t Au from 873.0m incl. 1m @ 198g/t Au from 874m
5m @ 4.8 g/t Au from 890.0m
-
NBD0152
6m @ 51.9 g/t Au from 592.0m incl. 1m @ 280g/t Au from 594m
-
NBD0153
3m @ 6.9 g/t Au from 997.0m,
-
NBD0154
5m @ 4.5 g/t Au from 511.0m
4m @ 4.6g/t Au from 537.0m
3m @ 6.5g/t Au from 546.0m
An initial block model is currently being developed
incorporating the drilling completed to date to allow an assessment
of the potential for an underground operation; whilst a programme
of approximately 12,000 metres of diamond core drilling has
commenced to infill the previous drilling to approximately 50 metre
spacing.
If the results of the infill programme are successful, they will
be incorporated into a Mineral Resource model to form the basis for
further studies on a potential underground exploration decline to
further test the system and enable a smooth transition to
underground production by the time of the completion of the open
pit in 2021.
Gokona Underground
With underground development activity focused on delivering
production stopes in Gokona West Zone, most of the drilling
activity for the quarter was grade control diamond drilling to
support those activities.
The key drilling platform on the 1030mRL elevation continued to
be developed during the quarter, with commencement of exploration
drilling scheduled for the second quarter of 2017. Exploration
activity during the first quarter was limited to some additional
drilling adjacent to the defined stoping blocks at Gokona East Zone
to test for continuity of higher grade mineralisation to the Gokona
Fault.
Several significant high grade intercepts were returned adjacent
to the Gokona Fault extending the previously modelled
mineralisation, including:
- UKGC_00262 19.4m @ 64.7g/t Au
from 37.0m incl. 2m @ 453g/t Au from 45m
- UKGC_00260 9.0m @ 59.9g/t Au from
46.0m incl. 3m @ 204g/t Au from 49m
- UGKD_00107 24.0m @ 12.5g/t Au
from 31.0m
- UKGC_00251 25.0m @ 7.0g/t Au from
36.0m
- UGKD_00113 10.0m @ 10.4 g/t Au
from 32.0m
In the second quarter, underground diamond core drilling will
test for the deeper fault offset extension of the Gokona East Zone
mineralisation, test continuity of higher grade mineralisation
beneath the existing open pit and immediately west of the Gokona
Fault, commence drilling of the Gokona Central area below the open
pit, and continue grade control drilling of Gokona West. The
programme will comprise of approximately 75,000 metres of drilling
over the next two years, with approximately 45,000 metres to be
drilled in 2017. The aim of these programmes is to be able to
increase the underground life of mine to at least 10 years.
Nyabigena
An initial programme of approximately 10,000 metres of surface
diamond core drilling commenced at the end of the first quarter at
Nyabigena, with results pending on the first hole. This programme
is designed to test the continuity of mineralisation below the
existing open pit, better define offsetting fault structures, and
enable more detailed metallurgical domaining of the deposit.
Subject to the success of this programme and initial desktop study
in 2017, further drilling is planned for 2018; after which a
detailed study on the potential for development of an underground
operation could be undertaken.
Greenfield Exploration
Kenya
West Kenya Project
During Q1 2017 we announced the maiden NI 43-101 compliant
Inferred Mineral Resource Estimate (MRE) on the Liranda Corridor,
within our West Kenya Project. The Inferred MRE of 3.46 million
tonnes at 12.1 grams per tonne for 1.31 million ounces is primarily
located on three main zones of mineralisation at the Acacia
prospect. The gold mineralisation at Acacia is associated with
shear zones ranging in width from 0.5 metres to 10 metres
(averaging 3 metres true width; dependent on the zone), hosted by a
mafic volcanic sequence. The strike lengths of the explored
sections of the main mineralised zones at Acacia vary between 200
metres and 600 metres and the resource is currently defined down to
a vertical depth of 750 metres with the structures open down
plunge.
In addition, we have identified mineralised zones on the
Bushiangala prospect, approximately one kilometre away from the
Acacia prospect. At this stage this material remains
unclassified due to drill density and the need to further
understand the controls on the mineralisation and its continuity.
Recent results from the Bushiangala prospect include, 7m @ 17.6g/t
Au, 3m @ 6.88g/t Au and 4m @ 9.99g/t from step-out holes. Based on
the work undertaken to date, the current scale of the
mineralisation is between 0.60Mt and 1.50Mt at a grade between
6.0g/t Au and 10.0g/t Au, for a metal target of between 190,000
ounces and 290,000 ounces of contained gold. A key element of the
2017 drilling programmes at Bushiangala is to establish an Inferred
Resource and to expand the scale of the targeted
mineralisation.
Since 2014 through to the time of the maiden resource
announcement, the total drilling on Liranda Corridor targets
amounted to 44 Reverse Circulation holes for 4,438 metres and 132
diamond core holes for 64,700 metres. During Q1 2017, a total
of 29 diamond holes were completed or are underway for 16,708
metres, with three diamond core rigs drilling on Acacia and three
drilling on Bushiangala.
Current drilling on the Acacia prospect is targeting a
significant expansion to the resource through testing up and down
plunge extensions, as well as extensions along strike to the west.
Drilling during the quarter continued to intersect significant high
grade results from this drilling including results of:
- LCD0128* - 4.0m @ 33.9g/t Au from 302m, 4.2m @ 19.0g/t Au from
552m, and 2.5m @ 76.7g/t Au from 577m.
- LCD0130* - 3.1m @ 14.1 g/t Au from 197m,
- LCD0132* - 1.3m @ 65.6g/t Au from 301m and 4.7m @ 14.0g/t Au
from
446.5m.
- LCD0133 - 0.5m @ 97.2g/t Au from 585.5m and 3.3m @ 10.9g/t Au
from 753.7m.
- LCD0135 - 3.3m @ 33.0g/t Au from 664.9m and 0.5m @ 25.0g/t Au
from 687m
- LCD0138 - 1.0m @ 26.0g/t Au from 200m and 2m @ 22.6g/t Au from
214m,
- LCD0140 - 2.1m @ 11.7g/t Au from 441.6m and 2.3m @ 15.1g/t Au
from 482m.
- LCD0141 - 3.1m @ 16.1g/t Au from 708m,
- LCD0145 - 3.2m @ 14.5g/t Au from 561m.
- LCD0146 - 2.5m @ 28.5g/t Au from 270.7m.
- LCD0147 - 1.3m @ 12.5g/t Au from 132.9m and 0.6m @
39.1g/t Au from 251.4m.
- LCD0150 - 1.8m @ 7.56g/t Au from 457.2m and 6.0m @ 6.40g/t Au
from 558m
- LCD0152 - 6.8m @ 12.7g/t Au from 211.7m,
- LCD0153 - 1.0m @ 10.6g/t Au from 384m and 2m @ 14.2g/t Au from
576.8m
Note: * - holes included in maiden
Inferred resource received during the quarter
An initial programme of approximately 45,000 metres of diamond
core drilling is being undertaken during Q1-Q3 2017; with the
objective of significantly increasing the Inferred Resource on the
Liranda Corridor to more than 2 million ounces. We also plan to
commence a scoping study in H2 2017 to consider the potential for
an underground mining operation. In order to increase
the testing of the five main prospects in the Liranda Corridor we
also plan to increase the number of drill rigs operating from six
to eight.
Burkina
Faso
During Q1 2017 we continued to explore our properties in the
highly prospective Houndé Belt in southwest Burkina Faso. Acacia currently has four joint
ventures and an interest in over 2,700km2 of prospective
greenstone belt. Acacia manages all of the joint ventures. A major
component of Q1 2017 work programmes was to review the structural
architecture of our land holdings and complete a target generation
exercise using airborne aeromagnetic and radiometric data and
ground IP geophysical data where available. These target
generation layers are now being synthesised with our surface
geochemical data layers to develop priority drilling targets. To
date we have delineated more than 65 targets warranting follow-up
by either mapping or reconnaissance drilling.
South Houndé Joint Venture (Sarama
Resources Limited)
At the South Houndé JV project we continued field-based
exploration activities focused both on resource extensions to the
Tankoro Resource and regional exploration programmes searching for
new discoveries. Acacia has taken over management of the South
Houndé JV as of 1st January. During the quarter a total of 11,490
metres of Aircore drilling was completed on the Ouangoro prospect
anomaly, 981 metres of RC pre-collars and 2,330 metres of diamond
core tails were drilled into the Chewbacca and Yoda shoots on the
MM Zone and into the Jabba shoot on the MC Zone structures at
Tankoro. Mapping and surface sampling was conducted on the regional
prospects.
Tankoro - MM and MC Zones
During the quarter we continued a programme of drilling to test
the down-plunge extensions of higher grade gold mineralisation
related interpreted cross structures at the MM and MC Zones within
the Tankoro resource. A “results based” phased strategy has been
adopted, “cycling” the rig between the Chewbacca, Yoda, Anakine and
Jabba zones within the MM and MC parallel mineralised zones.
All holes drill to date have intersected the targeted porphyries
and cross structures, however, the high-grade shoots are either
lower grade than expected, or of shorter strike extend that
expected.
The current phase of drilling continues to target interpreted
high grade domains associated with cross-structures and is applying
the learnings from the initial holes. Results for MM Zone
drilling are pending and expected to be received during Q2 2017,
with visually encouraging zones observed in drilling to date.
RC and diamond core drilling elsewhere on the Tankoro Corridor will
be focused on additional drilling on the northeast extension of the
mineralised system at the Phantom East prospect.
Additionally, we plan to undertake diamond core drilling at the Guy
prospect, which is a multi-kilometre gold soil anomaly occurring at
the intersection of the Tankoro Corridor (NE strike) and the Guy
Corridor (north-south structure)
Ouangoro Anomaly
Aircore drilling commenced at the beginning of February on the
Ouagoro Anomaly with the plan to drill 19 regional 1 kilometre
spaced traverses across a 15 kilometre x 4 kilometre zone of
semi-continuous gold-in-soil geochemical anomalism along an
interpreted NNE-trending linear geophysical anomaly. To date 10
traverses have been drilled for 11,490 metres advance, with results
for first four traverses received at quarter-end. Positive
results have been returned from all four traverses including better
results of 8m @ 0.51g/t Au from 46m, 20m @ 0.67g/t Au from
28m (including 2m @ 3.09g/t Au), 8m @ 0.86g/t from surface
(including 2m @ 2.32g/t Au), 21m @ 0.26g/t Au from 8m and 18m @
0.61g/t Au from 6m (including 4m @ 1.69g/t Au). Mineralisation in
drilling and observed in artisanal workings is typically associated
with quartz veins in weathered greywacke, siltstone and sandstone
lithologies. It is anticipated that infill Aircore drilling
(400m spaced) will be completed as Phase 2 of the programme once
all results are received and interpreted.
Central Houndé Joint Venture (Thor Explorations Limited)
Surface geochemical sampling undertaken over the past 18 months
has identified several very encouraging zones of gold anomalism
coincident with the interpreted Legue-Bongui structural corridor,
including an 8km x 2km anomalous gold zone. During the quarter we
completed a structural targeting exercise, reviewed the surface
gold anomalies from soil sampling, and undertook multi-element
geochemical analysis of all samples, using a portable XRF, from the
regional soil sampling programmes. As a result of this
targeting exercise we delineated 35 targets across the Central
Houndé project area, and we commenced field validation, geological
mapping and further surface sampling programmes on priority target
areas.
During Q2 2017, we plan to continue review of our current
targets and commence RC drilling in early May of a number of
regional targets already reviewed with programmes designed.
Pinarello & Konkolikan Joint Venture (Canyon Resources
Limited)
Surface geochemical sampling undertaken over the past two years
has identified several very encouraging zones of gold anomalism
coincident with the interpreted structural corridors, magnetic
features and surface IP geophysical anomalies. During the
quarter we completed a structural targeting exercise, reviewed the
surface gold anomalies from soil sampling, and undertook
multi-element geochemical analysis, using a portable XRF, of all
samples from the regional soil sampling programmes. As a
result of this targeting exercise we delineated 28 targets across
the Pinarello project area, and we commenced field validation,
geological mapping and further surface sampling programmes on
priority target areas.
Throughout the quarter we continued Aircore drilling with 227
Aircore holes drilled for 11,549 metres on three wide spaced
traverses over a strike distance of 2km of the 8km x 3km Tangalobe
prospect. The objective of the drilling programme is to test
gold-in-soil anomalies that are coincident with anomalous termite
mound results and interpreted structural/magnetic targets. The
geology of the area is characterised by sedimentary sequences.
There is a prominent shear zone striking at ~040° and
moderately-steeply dipping towards southeast. Quartz float is
ubiquitous in the area of drilling. Potential mineralised zones in
the holes drilled so far are associated with oxidized quartz veins
and haematite alteration. Partial assay results have been received
to date with better results including: 4m @ 1.64g/t Au from 49m, 2m
@ 6.0g/t Au from 57m, 3m @ 0.77g/t from 29m, 3m @ 0.72g/t Au from
5m, 1m @ 1.02g/t Au from 44m, 2m @ 0.60g/t Au from 31m and 1m @
1.33g/t Au from 44m.
Acacia has now earned 75% equity in the project and we have
therefore entered the contributory/dilution phase of the JV
agreement.
Programmes for Q2 2017 include field RC drilling, Aircore
drilling, geological mapping, prospect reviews, further infill soil
sampling and trenching.
Frontier JV
Regional regolith and geological mapping has been completed for
both licences that make up the JV. A regional 800m x 400m
reconnaissance soil sampling programme and termite mound, rock chip
and quartz lag sampling programmes have been completed. A total of
7,195 samples were collected. Approximately two third of assay
results had been received by the end of the quarter. Interpretation
of preliminary gold assays and litho-structural information from
regolith mapping and aeromagnetic surveys has resulted in an
initial 12 regional targets being defined for follow-up work.
The Q2 2017 programme includes field validation of delineated
soil anomalies, infill soil sampling and regolith / geological
mapping. It is anticipated several traverses of Aircore
drilling will be completed across high priority target areas from
the structural targeting combined with gold-in-soil anomalies.
Tanzania
Nyanzaga
During the quarter OreCorp Limited published the results of the
Pre-Feasibility Study (“PFS”) on the Nyanzaga Project. The PFS, led
by Lycopodium Minerals Pty Ltd of Perth, Western
Australia, delivered an optimal development scenario of a
4Mtpa concurrent open pit (“OP”) and underground (“UG”) operation
for pre-production capital costs estimate of US$287M, which includes a US$33M contingency. The concurrent mining
schedule significantly reduced the low grade stockpiling scenario
considered in the Scoping Study and increased the OP contained
ounces and life of mine (“LOM”) average mineralised material grade
processed from 1.9 g/t gold in the Scoping Study to 2.0 g/t
(+5%).
Based on the PFS, the Project is expected to deliver an average
gold production of 213koz per annum over a 12 year LOM, peaking at
249koz in Year 3 and totalling approximately 2.56Moz of gold
produced over the LOM. The AISC and AIC are estimated to be
US$838/oz and US$858/oz respectively over the LOM. Acacia and
OreCorp have agreed the scope of the Definitive Feasibility Study
(“DFS”) and this has commenced early in the second quarter. The DFS
will focus on optimising the OP and UG schedules; metallurgy and
comminution aimed at maximising metallurgical recoveries, reagent
and power consumption; and confirming detailed plant design.
Mali
In Mali we continued to define
and drill test surface gold anomalies identified in late
2016. At the same time, we continued to build our land
position in the Senegal-Mali Shear Zone (SMSZ) with a the grant of
a further two land packages, one under joint venture (Bou Bou) and
the other 100% Acacia (Gourbassi). Acacia now holds five
exploration permits covering 191 square kilometres on the SMSZ.
Tintinba - Bane Project
The Tintinba-Bane Project consists of three permits covering
approximately 150km2. These properties are located
within the Kenieba Inlier region of Western Mali, along the world class
Senegal-Mali-Shear-Zone (SMSZ),
which hosts more than 50 million ounces of gold endowment. During
the quarter, a ground-based gradient array induced polarisation
geophysical survey was completed (31 line km) and interpreted.
Results from IP, soils, drilling and mapped and interpreted geology
have been used to refine existing and define new targets for drill
testing. At least 12 targets with co-incident IP
chargeability, resistivity, and surface gold anomalism have been
identified for RC drill testing during H1 2017.
RC drilling commenced in mid-March
2017 with 14 RC holes drilled for 1,856 metres. Assay
results have only been received for the first hole at quarter end
with best assay being 15m @ 0.5g/t Au from 60m.
Bourdala JV
The Boudala JV is a joint venture with a local company over the
Bou Bou licence located some 15km from the centroid of the Tintinba
JV further to the south. The property is located within the central
portion of the Kedougou-Kenieba Inlier and just to the east of the
highly prospective Senegal-Mali Shear Zone. Acacia can earn up to
100% through a series of staged payments over a period of 36
months.
During the quarter Acacia undertook mapping and rock chip
sampling as well as backfilling and clearing of artisanal pits in
the main target area ahead of planned RC drilling. An RC drill
traverse designed to test a broad zone of mapped mineralisation
300m x 500m is expected to commence in April.
Gourbassi Est
During Q1 2017, the Gourbassi Est licence was received. The
licence is located immediately west of the Tintinba JV in the
Central Senegal Mali Shear Zone area of the Kedougou-Kenieba
Inlier. The property is located to the west of the SMSZ in an area
dominated by footway splays to the Central SMSZ. The programme for
Q2 2017 is to review the historic data and completed mapping and
surface sampling programmes. Dependent on results of this
first pass work we will commence RC and/or diamond core drilling
during Q2.
Non-IFRS Measures
Acacia has identified certain measures in this report that are
not measures defined under IFRS. Non-IFRS financial measures
disclosed by management are provided as additional information to
investors in order to provide them with an alternative method for
assessing Acacia’s financial condition and operating results, and
reflects more relevant measures for the industry in which Acacia
operates. These measures are not in accordance with, or a
substitute for, IFRS, and may be different from or inconsistent
with non-IFRS financial measures used by other companies. These
measures are explained further below.
Net average realised gold price per ounce sold is a
non-IFRS financial measure which excludes from gold revenue:
- Unrealised gains and losses on non-hedge derivative contracts;
and
- Export duties
It also includes realised gains and losses on gold hedge
contracts reported as part of cost of sales.
Net average realised gold price per ounce sold have been
calculated as follow:
(US$000) |
Three months ended 31 March |
|
Year
ended 31 December |
(Unaudited) |
2017 |
2016 |
|
2016 |
Gold
revenue |
225,628 |
211,885 |
|
1,014,468 |
Less:
Realised gold hedge losses |
- |
- |
|
(1,818) |
Net
gold revenue |
225,628 |
211,885 |
|
1,012,651 |
Gold
sold (ounces) |
184,744 |
184,181 |
|
816,743 |
Net
average realised gold price (US$/ounce) |
1,221 |
1,150 |
|
1,240 |
Cash cost per ounce sold is a non-IFRS financial measure.
Cash costs include all costs absorbed into inventory, as well as
royalties, and production taxes, and exclude capitalised production
stripping costs, inventory purchase accounting adjustments,
unrealised gains/losses from non-hedge currency and commodity
contracts, depreciation and amortisation and corporate social
responsibility charges. Cash cost is calculated net of co-product
revenue. Cash cost per ounce sold is calculated by dividing the
aggregate of these costs by total ounces sold.
The presentation of these statistics in this manner allows
Acacia to monitor and manage those factors that impact production
costs on a monthly basis. Cash costs and cash cost per ounce sold
are calculated on a consistent basis for the periods presented.
The table below provides a reconciliation between cost of sales
and total cash cost to calculate the cash cost per ounce sold.
(US$'000) |
Three months ended 31 March |
|
Year
ended 31 December |
(Unaudited) |
2017 |
2016 |
|
2016 |
Cost of Sales |
|
|
|
|
Direct
mining costs |
98,783 |
115,901 |
|
479,022 |
Third
party smelting and refining fees |
5,321 |
6,857 |
|
25,588 |
Realised losses on economic hedges |
108 |
3,915 |
|
9,619 |
Realised losses on gold hedges |
- |
- |
|
1,818 |
Royalty expense |
10,642 |
10,017 |
|
47,237 |
Depreciation and amortisation* |
34,542 |
35,210 |
|
163,796 |
Total |
149,396 |
171,900 |
|
727,080 |
|
|
|
|
|
Total cost of sales |
149,396 |
171,900 |
|
727,080 |
Deduct: depreciation and amortisation* |
(34,542) |
(35,210) |
|
(163,796) |
Deduct: realised losses on gold hedges |
- |
- |
|
(1,818) |
Deduct: Co-product revenue |
(8,273) |
(9,024) |
|
(39,063) |
Total cash cost |
106,581 |
127,666 |
|
522,403 |
|
|
|
|
|
Total
ounces sold |
184,744 |
184,181 |
|
816,743 |
Total
cash cost per ounce sold |
577 |
693 |
|
640 |
*Depreciation and amortisation includes the depreciation
component of the cost of inventory sold
All-in sustaining cost (AISC) is a non-IFRS financial
measure. The measure is in accordance with the World Gold Council’s
guidance issued in June 2013. It is
calculated by taking cash cost per ounce sold and adding corporate
administration costs, share-based payments, reclamation and
remediation costs for operating mines, corporate social
responsibility expenses, mine exploration and study costs, realised
gains and/or losses on operating hedges, capitalised stripping and
underground development costs and sustaining capital expenditure.
This is then divided by the total ounces sold. A reconciliation
between cash cost per ounce sold and AISC for the key business
segments is presented below:
(Unaudited) |
Three months ended 31 March 2017 |
|
Three months ended 31 March 2016 |
(US$/oz sold) |
Bulyanhulu |
North
Mara |
Buzwagi |
Group |
|
Bulyanhulu |
North
Mara |
Buzwagi |
Group |
Cash
cost per ounce sold |
786 |
410 |
694 |
577 |
|
661 |
484 |
1,171 |
693 |
Corporate administration |
32 |
26 |
34 |
36 |
|
26 |
34 |
27 |
29 |
Share
based payments |
13 |
8 |
25 |
56 |
|
7 |
5 |
7 |
21 |
Rehabilitation |
12 |
10 |
5 |
10 |
|
6 |
8 |
4 |
6 |
CSR
expenses |
8 |
6 |
12 |
12 |
|
4 |
17 |
7 |
16 |
Capitalised development |
299 |
190 |
- |
183 |
|
182 |
157 |
0 |
135 |
Sustaining capital |
79 |
67 |
3 |
60 |
|
97 |
32 |
30 |
59 |
Total
AISC |
1,229 |
717 |
773 |
934 |
|
983 |
737 |
1,246 |
959 |
AISC is intended to provide additional information on the total
sustaining cost for each ounce sold, taking into account
expenditure incurred in addition to direct mining costs and selling
costs.
Where reference is made to AISC per ounce produced, this is
calculated in a similar manner as set out above, but adjusted for
the impact of the change in inventory charge/ credit relating to
finished gold inventory. This recalculated number is then divided
by ounces produced.
Cash cost per tonne milled is a non-IFRS financial
measure. Cash costs include all costs absorbed into inventory, as
well as royalties, co-product credits, and production taxes, and
exclude capitalised production stripping costs, inventory purchase
accounting adjustments, unrealised gains/losses from non-hedge
currency and commodity contracts, depreciation and amortisation and
corporate social responsibility charges. Cash cost is calculated
net of co-product revenue. Cash cost per tonne milled is calculated
by dividing the aggregate of these costs by total tonnes
milled.
EBITDA is a non-IFRS financial measure. Acacia calculates
EBITDA as net profit or loss for the period excluding:
- Income tax expense;
- Finance expense;
- Finance income;
- Depreciation and amortisation; and
- Impairment charges of goodwill and other long-lived
assets.
EBITDA is intended to provide additional information to
investors and analysts. It does not have any standardised meaning
prescribed by IFRS and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with IFRS. EBITDA excludes the impact of cash costs of financing
activities and taxes, and the effects of changes in operating
working capital balances, and therefore is not necessarily
indicative of operating profit or cash flow from operations as
determined under IFRS. Other companies may calculate EBITDA
differently.
A reconciliation between net profit for the period and EBITDA is
presented below:
(US$000) |
Three months ended 31 March |
|
Year
ended 31 December |
(Unaudited) |
2017 |
2016 |
|
2016 |
Net
profit/ (loss) for the period |
26,827 |
(52,410) |
|
94,944 |
Plus
income tax (credit)/ expense |
19,183 |
80,177 |
|
147,113 |
Plus
depreciation and amortisation* |
34,542 |
35,210 |
|
163,796 |
Plus
finance expense |
2,238 |
2,866 |
|
11,047 |
Less
finance income |
(597) |
(293) |
|
(1,512) |
EBITDA |
82,193 |
65,550 |
|
415,388 |
*Depreciation and amortisation
includes the depreciation component of the cost of inventory
sold.
Adjusted EBITDA is a non-IFRS financial measure. It is
calculated by excluding one-off costs or credits relating to
non-routine transactions from EBITDA. It excludes other credits and
charges that, individually or in aggregate, if of a similar type,
are of a nature or size that requires explanation in order to
provide additional insight into the underlying business
performance. EBITDA is adjusted for items (a) to (c) as contained
in the reconciliation to adjusted net earnings below.
EBIT is a non-IFRS financial measure and reflects EBITDA
adjusted for depreciation and amortisation and goodwill impairment
charges.
Adjusted net earnings is a non-IFRS financial measure. It
is calculated by excluding certain costs or credits relating to
non-routine transactions from net profit attributed to owners of
the parent. It includes other credit and charges that, individually
or in aggregate, if of a similar type, are of a nature or size that
requires explanation in order to provide additional insight into
the underlying business performance.
Adjusted net earnings and adjusted earnings per share have been
calculated as follows:
(US$000) |
Three months ended 31 March |
|
Year ended 31 December |
|
(Unaudited) |
2017 |
2016 |
|
2016 |
Net
earnings/(loss) |
26,827 |
(52,410) |
|
94,944 |
Adjusted for: |
|
|
|
|
Restructuring cost (a) |
- |
861 |
|
7,689 |
One off legal
settlements/recoveries (b) |
- |
- |
|
(3,455) |
Discounting of indirect taxes (c) |
- |
- |
|
(9,719) |
Prior
year tax positions recognised 1 |
- |
69,916 |
|
69,916 |
Tax
impact of the above |
- |
(258) |
|
1,646 |
Adjusted net earnings |
26,827 |
18,109 |
|
161,021 |
1 For the year ended 31
December 2016, US$69.9 million
represents a provision raised for the implied impact of an adverse
tax ruling made by the Tanzanian Court of Appeal with respect to
historical tax assessments of Bulyanhulu. As reported in Q1 2016,
the impact of the ruling was calculated for Bulyanhulu and
extrapolated to North Mara and Tulawaka as well and covers results
up to the end of 2015. On a site basis, US$35.1 million was raised for Bulyanhulu,
US$30.4 million for North Mara and
US$4.4 million for Tulawaka.
Adjusted net earnings per share is a non-IFRS financial
measure and is calculated by dividing adjusted net earnings by the
weighted average number of Ordinary Shares in issue.
Free cash flow is a non-IFRS measure and represents the
change in cash and cash equivalents in a given period.
Net cash is a non-IFRS measure. It is calculated by
deducting total borrowings from cash and cash equivalents.
Mining statistical information
The following describes certain line items used in the Acacia
Group’s discussion of key performance indicators:
- Open pit material mined – measures in tonnes the total amount
of open pit ore and waste mined.
- Underground ore tonnes hoisted – measures in tonnes the total
amount of underground ore mined and hoisted.
- Underground ore tonnes trammed – measures in tonnes the total
amount of underground ore mined and trammed.
- Total tonnes mined includes open pit material plus underground
ore tonnes hoisted.
- Strip ratio – measures the ratio of waste?to?ore for open pit
material mined.
- Ore milled – measures in tonnes the amount of ore material
processed through the mill.
- Head grade – measures the metal content of mined ore going into
a mill for processing.
- Milled recovery – measures the proportion of valuable metal
physically recovered in the processing of ore. It is generally
stated as a percentage of the metal recovered compared to the total
metal originally present.