15 January 2018
Fourth Quarter Production Report for the three months ended
31 December 2017
Based on IFRS and expressed in US Dollars (US$)
Acacia Mining plc (“ACA’’) reports fourth quarter production
results
“We are pleased to report fourth quarter production of 148,477
ounces driven by strong operational performance at Buzwagi, whilst
we successfully transitioned Bulyanhulu into a reduced operational
state.” said Peter Geleta, Interim
CEO of Acacia. “Disciplined cost management, combined with the
operational performance, led to Q4 2017 all-in sustaining costs
(“AISC”) of US$779 per ounce, which
helped to significantly reduce the cash outflow in the quarter
despite the cost of transitioning Bulyanhulu to reduced operations.
At the end of the quarter, as previously announced, we also agreed
to sell a non-core royalty for US$45
million which will increase the strength of our balance
sheet. Our focus remains on delivering optimal performance in the
current operating environment and delivering value for all of our
stakeholders. We are also continuing to support efforts towards
achieving a negotiated resolution with the Tanzanian Government. We
look forward to providing guidance for the year in our preliminary
results in February.”
Highlights
- Q4 2017 gold production was slightly ahead of expectations at
148,477 ounces, although 30% lower than Q4 2016 which was a direct
result of Bulyanhulu transitioning to reduced operations
- Gold sales of 147,636 ounces were in line with production with
all gold produced being in doré form
- Preliminary Q4 2017 AISC1 of US$779 per ounce sold, 18% lower than Q4 2016 and
preliminary cash costs1 of US$581 per ounce sold, 14% lower than Q4
2016
- Q4 2017 preliminary AISC1, assuming sales ounces
equalled Q4 production, would have been approximately US$764 per ounce
- 2017 gold production of 767,883 ounces, 7% lower than 2016 as a
result of lower production mainly from Bulyanhulu, but ahead of
revised full year guidance of 750,000 ounces
- Full year sales of 592,861 ounces, 27% lower than 2016, driven
by the impact of the concentrate export ban
- Preliminary 2017 AISC1 of US$875 per ounce sold, 9% lower than 2016 and
below full year guidance range
- 2017 preliminary AISC1, assuming sales ounces
equalled full year production, would have been approximately
US$798 per ounce
- Cash balance was US$81 million at
31 December 2017 (net cash position
of US$10 million), a decrease of
US$15 million during the quarter as a
result of the cost of transitioning Bulyanhulu to reduced
operations
- Sale of non-core royalty in December for US$45 million with proceeds due to be received in
January 2018
Key Statistics |
Three months ended
31 December |
|
Year ended
31 December |
(Unaudited) |
2017 |
2016 |
|
2017 |
2016 |
Tonnes mined
(thousands of tonnes) |
5,270 |
9,644 |
|
31,917 |
38,491 |
Ore tonnes mined
(thousands of tonnes) |
2,274 |
2,584 |
|
13,707 |
9,419 |
Ore tonnes processed
(thousands of tonnes) |
1,855 |
2,567 |
|
8,719 |
9,818 |
Process recovery rate
(percent)* |
94.0% |
88.9% |
|
93.0% |
88.5% |
Head grade (grams per
tonne)* |
2.8 |
2.9 |
|
3.1 |
3.0 |
Gold production
(ounces) |
148,477 |
212,954 |
|
767,883 |
829,705 |
Gold sold
(ounces) |
147,636 |
209,292 |
|
592,861 |
816,743 |
Copper production
(thousands of pounds) |
0 |
4,255 |
|
12,897 |
16,239 |
Cash cost
(US$/ounce)1 |
581 |
679 |
|
587 |
640 |
AISC (US$/ounce)1 |
779 |
952 |
|
875 |
958 |
Net average realised
gold price (US$/ounce)1 |
1,296 |
1,211 |
|
1,260 |
1,240 |
Capital expenditure
(US$’000)2 |
21,301 |
57,826 |
|
149,376 |
195,898 |
Cash balance |
80,513 |
317,791 |
|
80,513 |
317,791 |
Total borrowings |
71,000 |
99,400 |
|
71,000 |
99,400 |
1 These are non-IFRS measures. Refer to page 4 for
definitions
2 Excludes non-cash
capital adjustments (reclamation asset adjustments), includes
finance lease purchases and land purchases treated as long term
prepayments
*Reported process recovery rates and head grade for the Group
includes the impact of tailings retreatment at Bulyanhulu
Operating update for the three months ended 31 December 2017
Gold production for the quarter amounted to 148,477 ounces, a
30% decrease on the corresponding quarter of 2016 and a 22%
decrease on Q3 2017. The decrease was predominantly driven by the
decision taken in September 2017 to
reduce operational activity at Bulyanhulu which resulted in no
production activities for the quarter, except for the production
from reprocessing tailings that resumed in December and which
delivered 2,856 ounces.
Gold ounces sold for the quarter of 147,636 ounces were broadly
in line with gold produced for the quarter and 29% lower than Q4
2016.
At Buzwagi, gold production of 73,603 ounces for Q4 2017 was 76%
higher than in Q4 2016, driven by an increase in grade due to ore
tonnes solely being mined from the main ore zone as the mine
accessed the final stages of the open pit before it moves to
becoming a stockpile processing operation in 2018.
At North Mara, gold production for the quarter of 72,018 ounces
was in line with plan but 21% lower than Q4 2016 mainly due to
lower head grade driven by the underground mine grade of 7.7 grams
per tonne being 30% lower than the prior year period. This was a
result of mining taking place in the lower grade west zone of the
Gokona Underground. Lower grades were also received from the
Nyabirama pit due to increased mining from the Stage 4 open
pit.
At Bulyanhulu, gold production for the quarter amounted to 2,856
ounces, 96% below Q4 2016, as a result of the decision taken in
September to reduce operational activity at Bulyanhulu. During the
quarter there were no production activities from the underground
mine and all production came from the retreatment of tailings which
re-commenced in December 2017
following sufficient rainfall being received at the mine.
Total tonnes mined for the quarter were 5.3 million, compared to
9.6 million in Q4 2016, primarily due to lower waste tonnes mined
at Buzwagi as the mine accessed the final stages of the open pit
and saw restricted access in December due to excessive
rainfall.
Tonnes processed in the fourth quarter were 1.9 million, 28%
lower than Q4 2016, predominantly driven by the reduced operational
activity and temporary suspension of tailings retreatment at
Bulyanhulu, and lower mill availability at Buzwagi.
The average grade processed for the quarter was 2.8 grams per
tonne which was 3% lower than the prior year period, mainly due to
no underground material being processed at Bulyanhulu, a lower head
grade at North Mara driven by lower mined grades, partly offset by
higher head grades at Buzwagi due to higher mined grades.
There was no copper production for the quarter as a result of
the reduced operational activity at Bulyanhulu and at Buzwagi as a
result of the flotation circuit bypass.
The cash balance as at 31 December
2017 amounted to approximately US$81
million and decreased by US$15
million during the quarter. The sale of a non-core royalty
in December 2017 for US$45 million, with proceeds due to be received
later in January 2018, will
strengthen current cash balances. The outstanding balance of the
CIL debt facility amounted to approximately US$71 million at year end.
ENQUIRIES
For further information, please visit our website:
www.acaciamining.com or contact:
Acacia Mining plc |
+44 (0) 207 129 7150 |
Peter Geleta, Interim Chief
Executive Officer
Jaco Maritz, Chief Financial
Officer
Giles Blackham, Head of Investor
Relations
Camarco |
+44 (0) 203 772 2500 |
Gordon Poole
Nick Hennis
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 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.
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.
Disclaimer and forward-looking statements
This announcement is for information
purposes only and does not constitute an invitation or offer to
underwrite, subscribe for or otherwise acquire or dispose of any
securities of Acacia in any jurisdiction.
This announcement includes
“forward-looking statements” that express or imply expectations of
future events or results as opposed to historical facts. These
statements include, 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 herein.
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 and 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
announcement. Any forward-looking statements in this announcement
only reflect information available at the time of preparation. Save
as required under the Market Abuse Regulation or otherwise as may
be required under applicable law, Acacia explicitly disclaims any
obligation or undertaking publicly to update or revise any
forward-looking statements in this announcement, whether as a
result of new information, future events or otherwise. Nothing in
this announcement 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 its historical published profits or
earnings per share.
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. 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.
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, reduced operations costs
and corporate social responsibility charges. Cash cost is
calculated net of co-product revenue.
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 cost per ounce sold is calculated by
dividing the aggregate of these costs by gold ounces sold. Cash
costs and cash cost per ounce sold are calculated on a consistent
basis for the periods presented.
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, reclamation and remediation costs for
operating mines, corporate social responsibility expenses, mine
exploration and study costs, capitalised stripping and underground
development costs and sustaining capital expenditure. This is then
divided by the total ounces sold. 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, depreciation and selling costs.
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 / trammed – measures in tonnes
the total amount of underground ore mined and hoisted /
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.