TIDMACA
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$45 million with proceeds due to
be received in January 2018
Key Statistics Three months ended Year ended
31 December 31 December
(Unaudited) 2017 2016 2017 2016
Tonnes mined (thousands of 5,270 9,644 31,917 38,491
tonnes)
Ore tonnes mined (thousands of 2,274 2,584 13,707 9,419
tonnes)
Ore tonnes processed (thousands 1,855 2,567 8,719 9,818
of tonnes)
Process recovery rate (percent)* 94.0% 88.9% 93.0% 88.5%
Head grade (grams per tonne)* 2.8 2.9 3.1 3.0
Gold production (ounces) 148,477 212,954 767,883 829,705
Gold sold (ounces) 147,636 209,292 592,861 816,743
Copper production (thousands of 0 4,255 12,897 16,239
pounds)
Cash cost (US$/ounce)1 581 679 587 640
AISC (US$/ounce)1 779 952 875 958
Net average realised gold price 1,296 1,211 1,260 1,240
(US$/ounce)1
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.
END
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