TIDMACA
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$196 million, due
to sales lagging production and indirect tax outflows
Three months ended 31 Year ended 31
March Dec
(Unaudited) 2017 2016 2016
Gold production (ounces) 219,670 190,210 829,705
Gold sold (ounces) 184,744 184,181 816,743
Cash cost (US$/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) 6.5 (12.8) 23.2
(cents)
Adjusted net earnings1 26,827 18,109 161,021
Adjusted net earnings per share (AEPS) 6.5 4.4 39.2
(cents)1
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$32 million is covered by
the MOS, following the offset of North Mara corporate tax mentioned above.
Resignation of Non-executive Director
Peter Tomsett has informed the Company that he plans to step down from the
Acacia Board of Directors following the Annual General Meeting later today due
to personal circumstances. Following this change, the Acacia Board will
comprise eight members, including 5 Independent Non-Executive Directors, two
Non-Executive Directors and one Executive Director. Acacia will announce a
replacement Senior Independent Director in due course. Acacia would like to
thank Peter for his valuable commitment and support to the Company during his
time on the Board and wish him all the best for the future.
Key Statistics Three months ended 31 Year ended 31
March December
(Unaudited) 2017 2016 2016
Tonnes mined Kt 9,481 9,407 38,491
Ore tonnes mined Kt 3,216 2,445 9,419
Ore tonnes processed Kt 2,420 2,488 9,818
Process recovery rate exc. Tailings % 93.4% 89.6% 92.3%
reclaim
Head grade exc. tailings reclaim g/t 3.5 3.0 3.3
Process recovery rate inc. tailings % 89.8% 88.9% 88.5%
reclaim
Head grade inc. tailings reclaim g/t 3.1 2.8 3.0
Gold production oz 219,670 190,210 829,705
Gold sold oz 184,744 184,181 816,743
Copper production Klbs 4,656 3,803 16,239
Copper sold Klbs 2,487 3,681 14,745
Cash cost per tonne milled exc. US$/t 51 59 62
tailings reclaim1
Cash cost per tonne milled inc. US$/t 44 51 53
tailings reclaim1
Per ounce data
Average spot gold price2 US$/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 2017 2016 2016
stated)
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 47,651 30,340 251,592
and taxation
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$1.2 million).
Mine Site Review
Bulyanhulu
Key statistics
Three months ended 31 Year ended
March 31
December
(Unaudited) 2017 2016 2016
Key operational information:
Ounces produced oz 63,346 78,426 289,432
Ounces sold oz 53,805 72,448 279,286
Cash cost per ounce sold1 US$/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$ 4,212 7,085 20,231
('000)
- Capitalised development US$ 16,070 13,168 63,082
('000)
- Expansionary capital US$ 478 194 1,262
('000)
20,760 20,447 84,575
- Non-cash reclamation asset US$ 1,042 4,214 10,728
adjustments ('000)
Total capital expenditure US$ 21,802 24,661 95,303
('000)
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$2.3 million).
Buzwagi
Key statistics
Three months ended 31 Year ended
March 31
December
(Unaudited) 2017 2016 2016
Key operational information:
Ounces produced oz 59,856 37,063 161,830
Ounces sold oz 37,199 37,433 161,202
Cash cost per ounce sold1 US$/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$ 141 1,150 3,582
('000)
- Capitalised development US$ - - -
('000)
141 1,150 3,582
- Non-cash reclamation asset US$ (78) 1,421 4,524
adjustments ('000)
Total capital expenditure US$ 63 2,571 8,106
('000)
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$1.2 million). Capital expenditure for the quarter
consisted of the corrosion treatment of the process plant with the planned
expansion of the tailings storage facility not yet started.
North Mara
Key statistics
Three months ended 31 Year ended
March 31
December
(Unaudited) 2017 2016 2016
Key operational information:
Ounces produced oz 96,468 74,721 378,443
Ounces sold oz 93,740 74,300 376,255
Cash cost per ounce sold1 US$/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$ 6,256 2,378 28,317
('000)
- Capitalised development US$ 17,797 11,655 75,609
('000)
- Expansionary capital US$ 1,536 86 2,399
('000)
25,589 14,119 106,325
- Non-cash reclamation asset US$ 124 3,177 6,703
adjustments ('000)
Total capital expenditure US$ 25,713 17,296 113,028
('000)
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$000) Three months ended 31 March Year ended
31 December
(Unaudited) 2017 2016 2016
Gold revenue 225,628 211,885 1,014,468
Less: Realised gold hedge losses - - (1,818)
Net gold revenue 225,628 211,885 1,012,651
Gold sold (ounces) 184,744 184,181 816,743
Net average realised gold price (US$/ 1,221 1,150 1,240
ounce)
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.
Three months ended 31 March Year ended 31
(US$'000) December
(Unaudited) 2017 2016 2016
Cost of Sales
Direct mining costs 98,783 115,901 479,022
Third party smelting and refining 5,321 6,857 25,588
fees
Realised losses on economic hedges 108 3,915 9,619
Realised losses on gold hedges - - 1,818
Royalty expense 10,642 10,017 47,237
Depreciation and amortisation* 34,542 35,210 163,796
Total 149,396 171,900 727,080
Total cost of sales 149,396 171,900 727,080
Deduct: depreciation and amortisation (34,542) (35,210) (163,796)
*
Deduct: realised losses on gold - - (1,818)
hedges
Deduct: Co-product revenue (8,273) (9,024) (39,063)
Total cash cost 106,581 127,666 522,403
Total ounces sold 184,744 184,181 816,743
Total cash cost per ounce sold 577 693 640
*Depreciation and amortisation includes the depreciation component of the cost
of inventory sold
All-in sustaining cost (AISC) is a non-IFRS financial measure. The measure is
in accordance with the World Gold Council's guidance issued in June 2013. It is
calculated by taking cash cost per ounce sold and adding corporate
administration costs, share-based payments, reclamation and remediation costs
for operating mines, corporate social responsibility expenses, mine exploration
and study costs, realised gains and/or losses on operating hedges, capitalised
stripping and underground development costs and sustaining capital expenditure.
This is then divided by the total ounces sold. A reconciliation between cash
cost per ounce sold and AISC for the key business segments is presented below:
(Unaudited) Three months ended 31 March 2017 Three months ended 31 March 2016
(US$/oz sold) Bulyanhulu North Buzwagi Group Bulyanhulu North Buzwagi Group
Mara Mara
Cash cost per 786 410 694 577 661 484 1,171 693
ounce sold
Corporate 32 26 34 36 26 34 27 29
administration
Share based 13 8 25 56 7 5 7 21
payments
Rehabilitation 12 10 5 10 6 8 4 6
CSR expenses 8 6 12 12 4 17 7 16
Capitalised 299 190 - 183 182 157 0 135
development
Sustaining 79 67 3 60 97 32 30 59
capital
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.
END
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