20 July 2018
Results for the six months ended
30 June 2018 (Unaudited)
Based on IFRS and expressed in US
Dollars (US$)
Acacia Mining plc (“Acacia’’) reports
2018 interim results
“We succeeded in delivering another strong operational
performance during the first half, producing 254,759 ounces of
gold across the Group at all-in sustaining costs (“AISC”) of
US$945 per ounce,” said
Peter Geleta, Interim CEO of
Acacia. “The changes we made to the business in late 2017 have
delivered the desired results, helping to return the Group to free
cash generation for the first time since Q4 2016 and we are on
track to achieve the top end of our production guidance range of
435,000-475,000 ounces for 2018 at an AISC of US$935-985 per ounce. Following the stability we
have brought to the business during the last six months, our
priority remains on optimising performance across all areas of our
operations as we manage through the current uncertainty in the
operating environment and the on-going disputes with the Government
of Tanzania. By continuing to be
resilient, managing our costs and working to our mine plans, we are
addressing what we can control and will look to deliver value for
all of our stakeholders.”
Operational Highlights
- Regrettably, at North Mara, an operator for one of our
contractors had a fatal vehicle-related accident during the
period
- H1 gold production of 254,759 ounces, 41% lower than H1 2017,
with gold sales of 251,045 ounces being in line with
production
- H1 AISC1 of US$945 per
ounce sold, 6% above H1 2017, but tracking below the mid-point of
the full year guidance range
- Q2 gold production of 133,778 ounces, 36% lower than Q2 2017,
but 11% above Q1 2018
- Q2 gold sales of 134,090 ounces, 5% higher than Q2 2017, and in
line with gold production
- Q2 AISC1 of US$918 per
ounce sold, 10% above Q2 2017, but 6% lower than Q1 2018
Financial Highlights
- H1 Revenue of US$333.4 million,
15% lower than H1 2017
- H1 EBITDA1 of US$133.6
million, 17% down from H1 2017 and adjusted
EBITDA1 of US$91.6 million
45% lower than H1 2017
- H1 Net earnings of US$30.9
million (US7.5 cents per share), 51% down from US$62.5 million in H1 2017, impacted by a
US$24.2 million impairment at
Nyanzaga, with adjusted net earnings of US$13.5 million (US3.3 cents per share), 79%
lower than H1 2017
- Post period end, conditional agreement with OreCorp Limited,
operator of the Nyanzaga Project, for them to take full ownership
of the project in return for total consideration of US$10 million and a US$15
million capped net smelter royalty
- Cash generated from operating activities in H1 2018 of
US$58.9 million, was US$57.6 million higher than H1 2017
- Generated US$14 million of free
cash flow in Q2 2018 due to strong operational performance
- Cash balance rose 49% during H1 2018 to US$120.1 million due to a non-core royalty sale
and the strong operational performance
- Net cash1 of US$63.3
million, increased by US$53.8
million from the end of 2017
|
Three months ended 30 June |
Six months ended 30 June |
(Unaudited) |
2018 |
2017 |
2018 |
2017 |
Gold
production (ounces) |
133,778 |
208,533 |
254,759 |
428,203 |
Gold
sold (ounces) |
134,090 |
127,694 |
251,045 |
312,438 |
Cash
cost (US$/ounce)1 |
688 |
577 |
701 |
577 |
AISC
(US$/ounce)1 |
918 |
835 |
945 |
893 |
Net
average realised gold price (US$/ounce)1 |
1,324 |
1,255 |
1,328 |
1,235 |
(in
US$'000) |
|
|
|
|
Revenue |
176,865 |
157,763 |
333,382 |
391,664 |
EBITDA
1 |
47,796 |
79,222 |
133,570 |
161,415 |
Adjusted EBITDA1 |
47,796 |
83,199 |
91,600 |
166,219 |
Net
(loss)/earnings |
(19,118) |
35,716 |
30,877 |
62,543 |
Basic
(loss)/ earnings per share (EPS) (cents) |
(4.7) |
8.7 |
7.5 |
15.3 |
Adjusted net earnings1 |
5,116 |
38,500 |
13,519 |
65,906 |
Adjusted net earnings per share (AEPS) (cents)1 |
1.2 |
9.4 |
3.3 |
16.1 |
Cash
generated from/ (used in) operating activities |
34,912 |
(23,909) |
58,866 |
1,315 |
Capital expenditure2 |
25,507 |
45,628 |
51,286 |
92,456 |
Cash
balance |
120,089 |
175,886 |
120,089 |
175,886 |
Total
borrowings |
56,800 |
85,200 |
56,800 |
85,200 |
1 These are non-IFRS measures. Refer to page 24 for
definitions.
2 Excludes non-cash capital adjustments (reclamation
asset adjustments) and include finance lease purchases and land
purchases recognised as long term prepayments.
Other Developments
Safety
During the first half of the year we saw further improvements in
our overall safety results, with a Total Recordable Injury
Frequency Rate (TRIFR) in H1 2018 of 0.26, which is 35% lower than
the corresponding period in 2017. We also reduced the number of
High Potential Incidents (HPIs) by 35% compared to H1 2017.
However, regrettably, on 11 June
2018, Sadock Crispin Tindahinile, an operator for one of our
contractors at North Mara, passed away as a result of an accident
which involved a reversing vehicle at the Gokona deposit. Our
thoughts go out to his family, friends and colleagues. We have
completed an investigation into the incident and are implementing
the relevant recommendations at all our operations. We
continue to target zero injuries and remain committed to every
person going home safely every day.
Update on Discussions between Barrick
Gold Corporation (“Barrick”) and the Government of Tanzania (“GoT”)
Barrick and the GoT continued their discussions during the first
half, aimed at agreeing and documenting the details of the
framework announced in 2017. Acacia has been providing support to
Barrick to seek to ensure that they can have informed discussions
with the GoT, but has not been directly involved in those
discussions to date. Any proposal received by Acacia in the future
for a comprehensive resolution of the Company’s disputes with the
GoT that might be agreed in principle between Barrick and the GoT
as a result of those discussions will be subject to review by the
Independent Committee of the Acacia Board of Directors.
On the 24 June 2018 Barrick
announced that it would not be providing a timetable for the
completion of its discussions with the GoT, in order to allow its
process to continue in an orderly manner and without an arbitrary
deadline. Acacia continues to engage with Barrick to seek to
understand Barrick’s expectations for the future conduct and a
timetable for the completion of its discussions with the GoT.
Asset Level Discussions with
Interested Parties
As previously announced, in response to a number of indicative
expressions of interest from Chinese companies, the Company has
engaged with a small number of parties to explore the potential
sale of a stake in one or more of its Tanzanian assets. Given that
the timetable and successful completion of any discussions in
relation to any such transaction are likely to be inextricably
linked to the Company’s ability to reach a comprehensive agreement
with the GoT in order to settle historic disputes and provide a
stable future operating environment, no significant progress is
expected to be made on a potential transaction until there is a
clearer picture of the likely outcomes of Barrick’s discussions
with the GoT.
Acacia remains committed to shareholder value and evaluates all
opportunities against strict strategic and financial criteria. Any
transaction will be pursued only if it is determined by Acacia’s
Board to be in the best interests of the Company. There is
currently no certainty as to whether any agreement will be reached
with any of the potential investors.
Contribution to Tanzania
Since the inception of its businesses, over 15 years ago, the
Acacia Group and its predecessors have invested over US$4 billion into Tanzania and paid over US$1 billion in taxes and royalties. We remain
committed to supporting efforts towards Tanzania’s socioeconomic
advancement, including the realisation of the Government’s
Development Vision 2025.
In the first half of 2018, Acacia paid a total of US$67.1 million in taxes and royalties. This is
made up of provisional corporate tax payments for the first half of
the year of US$19.1 million, a final
2017 corporate tax payment of US$4.2
million, royalties of US$25.7
million, payroll taxes of US$13.0
million and other taxes of US$5.1
million.
During the first half of the year, our Sustainable Communities
initiatives contributed to tangible benefits for the local
communities around our operations. These benefits included
improvements to social infrastructure across multiple sectors
including agriculture, water and sanitation, education, health, and
road infrastructure. Access to safe, clean and potable water is a
challenge and the provision of water infrastructure in Kakola,
Msalala District alleviated this challenge for over 3,000 residents
around our Bulyanhulu mine. As part of its commitment to improving
access to quality health care services, North Mara funded an
upgrade to the Nyamwaga Health Centre at a cost of over
US$600,000. Following the upgrade,
the Government has decided to turn the Nyamwaga Health Centre into
a district and referral hospital, serving 350,000 people (2012
census data) and capable of handling approximately 500 patients a
day.
Agriculture is an important economic mainstay for our local
communities and is a key priority for our Sustainable Communities
Strategy. At Buzwagi, where 75% of the local population are
farmers, the first half of the year saw the development and
implementation of a three-year US$1.1
million agricultural improvement project in partnership with
Farm Concern International (“FCI”). The project seeks to
substantially increase farmers’ incomes through greater
productivity and improved links to market. Meanwhile at Bulyanhulu
we continued to support approximately 250 local farmers to access
inputs and services that improve agricultural practices and grow
productivity. Furthermore, our partnership with Africare at
Bulyanhulu enabled poultry farmers to register either as small
enterprises or cooperatives. As part of the project the farmers
were given over 6,000 day-old chicks and access to finance
opportunities to grow their businesses.
An independent report released by EY during the half year
demonstrated the significant contribution that Acacia’s three mines
continue to make to Tanzania’s economy as well as the country’s
broader social development. The report confirmed that during 2017
Acacia’s businesses purchased US$434
million of goods and services from suppliers located in
Tanzania. This represented 67% of
our total spend on goods and services in 2017. Of this amount,
approximately US$120 million of goods
and services were purchased from businesses in the direct locality
of the three mines in the country’s Lake Zone.
Despite facing several challenges during the year, the EY report
concluded that in 2017 Acacia contributed US$712 million to the national economy, which
represents around 1.5% of Tanzania’s total gross domestic product.
The 2017 contribution is comprised of US$200
million by our businesses, an indirect contribution via
suppliers of US$304 million and
induced contributions of US$208
million. Meanwhile Acacia’s three operations drove a direct
tax contribution to the Tanzanian Treasury of US$143 million in 2017 and led to a further
US$42 million in indirect or induced
taxes.
Local Content Rules
During the period, Acacia’s three local businesses submitted
preliminary local content plans to the Tanzanian Government in
response to the new local content regulations that came into force
in April 2018. These preliminary
plans build on the work undertaken by Acacia over the past years to
enhance and develop our local supply chain and increase local
employment in the workforce. Under Acacia’s existing Mineral
Development Agreements (“MDAs”), Acacia’s businesses are protected
from changes to laws that govern their operations including the
introduction of the local content regulations, but as part of our
commitment to development in the country, the Company intends to
work with the Government to clarify the requirements of the new
local content regulations and to practically meet these
requirements where possible. We continue to seek advice from the
Government on clarification of specific points around these
regulations and the practical implications thereof.
Update on Nyanzaga Project
Post-period end, OreCorp Tanzania Limited (“OreCorp”), a wholly
owned subsidiary of OreCorp Limited (ASX:ORR) completed its earn-in
obligations in respect of the Nyanzaga Project (the “Project”) in
Tanzania in accordance with the
earn-in agreement it entered into on 22
September 2015. As a result, OreCorp is executing its option
under the earn-in agreement to move to 51% ownership in the Project
through the payment of US$3 million
to Acacia. This option is conditional on approval from the
Tanzanian Fair Competition Commission and newly established Mining
Commission.
Acacia believes that a simplified ownership structure of
Nyanzaga would be beneficial to the future development of the
Project and would enable it to be best placed to provide
significant benefits to Tanzania.
As a result, Acacia has signed a binding conditional agreement
whereby OreCorp will move to 100% ownership of the Project, by
making a further payment of US$7
million. This agreement is conditional on the Tanzanian
regulatory approvals referred to above, definitive documentation
and on the grant of the Special Mining Licence in respect of the
Project. Acacia will also retain a net smelter return production
royalty, capped at US$15 million.
Carrying Value Review
At the end of the reporting period, there remained a number of
potential triggers for impairment testing of the carrying value of
Acacia’s assets, including the on-going uncertainty surrounding a
potential resolution of the Company’s disputes with the Government
of Tanzania and the fact that
Acacia’s market capitalisation has been lower than the carrying
value of its assets for a prolonged period of time. As a result,
Acacia undertook a review of the carrying value of its affected
Cash Generating Units (“CGUs”) post period end using the latest
information available as well as revised assumptions around
potential timing for a comprehensive resolution with the GoT. Based
on this review, the recoverable values of all our assets remain
above their respective carrying values at the discount rates used
during the previous reporting period. Further information on the
carrying value review can be found in Note 6 to the condensed
consolidated financial information.
As disclosed above, post period end, OreCorp, Acacia’s JV
partner in the Nyanzaga Project, has executed its option under the
earn-in agreement to increase its stake to 51% in the project
through the payment of US$3 million
to Acacia. Further to that, Acacia has signed a conditional
agreement to sell its remaining 49% stake to OreCorp for
US$7 million and a net smelter
royalty capped at US$15 million based
on future production. As a result of the agreement, Acacia expects
to recover the value of the asset through sale and not through
value in use and as such has valued the asset at fair value less
costs to sell of US$10.0 million and
recorded an impairment charge of US$24.2
million (refer to note 6 of the condensed consolidated
financial information for details) and reclassified the intangible
asset to non-current assets held for sale on the balance sheet.
Indirect Taxation update
During the first half of 2018, Acacia incurred a further
US$28.3 million of VAT outflows and
received no cash VAT refunds. We have also declared our first and
second provisional corporate tax payments for 2018 relating to
North Mara, amounting to approximately US$19.1 million, as well as a final 2017
corporate tax payment of US$4.2
million, and incurred foreign exchange revaluation losses on
the balance of US$3.2 million. The
provisional and final corporate tax payments have been partially
offset against indirect tax receivables in line with an existing
agreement with the Tanzanian Revenue Authority. As a result, the
net indirect tax receivables balance increased from US$170.7 million as at 31
December 2017 to US$172.5
million as at 30 June
2018.
As previously disclosed, Tanzania’s new mining legislation
includes an Amendment to the VAT Act 2015 to the effect that no
input tax credit can be claimed for the exportation of “raw
minerals”, with effect from 20 July
2017. Bulyanhulu, Buzwagi and North Mara have each now
received notices from the Tanzania Revenue Authority that they are
not eligible for any VAT relief from July
2017 onwards on the basis that all production (both doré and
concentrate) constitutes “raw minerals” for this purpose. The total
VAT claims submitted since July 2017
amount to approximately US$64
million. We have disputed this interpretation of the
legislation as a matter of Tanzanian law, while this is also a
matter that is in contravention of the relevant terms of our MDAs
with the Government of Tanzania
and subject to our on-going disputes with the GoT.
Dividend
Acacia has a cash flow based dividend policy where we aim to pay
a dividend of between 15-30% of our operational cash flow after
sustaining capital and capitalised development but before expansion
capital and financing costs. As a result of the uncertainty around
the potential resolution of the disputes between the Company and
the GoT and current liquidity requirements, the Board of Directors
has not recommended the payment of an interim dividend.
Bulyanhulu Reduced Operations and
Optimisation Study Update
In Q3 2017, Acacia took to the decision to place Bulyanhulu on
reduced operations (“ROP”) due to the unsustainable losses
experienced at the mine due to the inability to export concentrate.
This process was completed in Q4 2017. During the first half of
2018, reduced operating costs amounted to US$16.6 million and mainly consisted of site
overhead costs including labour, power and camp related costs,
security costs and on-going maintenance related work.
Acacia is taking the opportunity to progress essential capital
spend of approximately US$10 million
in 2018, primarily on the process plant, together with an
optimisation study which is designed to ensure that when the mine
restarts it does so in an optimised manner. The optimisation study
work is progressing well and is on track for completion at the end
of 2018. Preliminary indications from the study suggest that there
will be a focus on higher grade and therefore higher margin ounces
which consequently may lead to a smaller initial reserve base than
currently estimated. Once the study is completed at the end of
2018, we will be in a position to provide further details.
International Arbitration
In 2017, Bulyanhulu Gold Mine Limited (“BGML”), the owner and
operator of the Bulyanhulu mine, and Pangea Minerals Limited
(“PML”), the owner and operator of the Buzwagi mine each referred
their current disputes with the Government of Tanzania to arbitration in accordance with the
dispute resolution processes agreed by the GoT in its MDAs with
BGML and PML. The commencement of arbitration was necessary to
protect the rights of BGML and PML. The arbitration processes have
continued through 2018, with a number of necessary procedural steps
having been undertaken. Acacia remains of the view that a
negotiated resolution is the preferred outcome to its current
disputes with the GoT and the Company will continue to work to
achieve this.
Outlook
Despite the continuation of the challenging environment, the
Group has delivered a strong operational performance in H1 2018. In
achieving first half production of 254,759 ounces we are on track
to achieve the top end of our guidance range of 435,000-475,000
ounces for 2018 and continue to demonstrate the resilience that we
have built within our business. All gold produced in 2018 is
expected to be in doré form and will not, therefore, be impacted by
the current GoT export ban on concentrate.
During H1 2018 we recorded an AISC of US$945 per ounce sold, which was at the lower end
of the guidance range of US$935-985
per ounce and continue to expect full year group all-in sustaining
costs of between US$935-985 per ounce
and cash costs per ounce of between US$690-720 per ounce. Capital expenditure during
H1 2018 amounted to US$51 million, in
line with expectations, and we continue to expect full year group
capital expenditure of approximately US$100
million.
Acacia is committed to strong cost discipline and is continuing
to take steps to ensure the long-term viability of our business
whilst we work towards a comprehensive resolution of our disputes
with the Government of Tanzania.
Key
Statistics |
|
Three months ended 30 June |
Six months ended 30 June |
(Unaudited) |
|
2018 |
2017 |
2018 |
2017 |
Tonnes
mined |
Kt |
4,158 |
8,558 |
8,185 |
18,039 |
Ore
tonnes mined |
Kt |
841 |
3,996 |
1,679 |
7,212 |
Ore
tonnes processed incl. tailings reclaim |
Kt |
2,411 |
2,440 |
4,570 |
4,860 |
Process recovery rate excl. tailings reclaim |
% |
92.0% |
93.0% |
91.5% |
93.2% |
Head
grade excl. tailings reclaim |
g/t |
2.1 |
3.3 |
2.2 |
3.4 |
Process recovery rate incl. tailings reclaim |
% |
87.4% |
89.3% |
87.0% |
89.6% |
Head
grade incl. tailings reclaim |
g/t |
2.0 |
3.0 |
2.0 |
3.1 |
Gold
production |
oz |
133,778 |
208,533 |
254,759 |
428,203 |
Gold
sold |
oz |
134,090 |
127,694 |
251,045 |
312,438 |
Copper
production |
Klbs |
- |
4,409 |
- |
9,065 |
Copper
sold3 |
Klbs |
- |
(1,183) |
- |
1,304 |
Cash
cost per tonne milled excl. tailings reclaim1 |
US$/t |
45 |
34 |
46 |
43 |
Cash
cost per tonne milled incl. tailings reclaim1 |
US$/t |
38 |
30 |
38 |
37 |
Per
ounce data |
|
|
|
|
|
Average spot gold price2 |
US$/oz |
1,306 |
1,257 |
1,318 |
1,238 |
Net average realised gold
price1 |
US$/oz |
1,324 |
1,255 |
1,328 |
1,235 |
Total cash cost1 |
US$/oz |
688 |
577 |
701 |
577 |
All-in sustaining cost1 |
US$/oz |
918 |
835 |
945 |
893 |
Average realised copper price |
US$/lbs |
- |
2.56 |
- |
2.99 |
Financial results
|
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited, in US$'000 unless otherwise stated) |
2018 |
2017 |
|
2018 |
2017 |
Revenue |
176,865 |
157,763 |
|
333,382 |
391,664 |
Cost
of sales |
(112,826) |
(94,571) |
|
(221,226) |
(243,967) |
Gross profit |
64,039 |
63,192 |
|
112,156 |
147,697 |
Corporate administration |
(5,846) |
(5,878) |
|
(11,304) |
(12,520) |
Share
based payments |
(121) |
18,209 |
|
1,406 |
7,785 |
Exploration and evaluation costs |
(3,608) |
(9,372) |
|
(7,231) |
(16,150) |
Corporate social responsibility expenses |
(1,537) |
(1,544) |
|
(3,083) |
(3,739) |
Impairment charges |
(24,234) |
- |
|
(24,234) |
- |
Other
charges |
(26,388) |
(8,802) |
|
(3,621) |
(19,617) |
Profit before net finance expense and taxation |
2,305 |
55,805 |
|
64,089 |
103,456 |
Finance income |
676 |
946 |
|
808 |
1,543 |
Finance expense |
(4,404) |
(3,216) |
|
(8,240) |
(5,454) |
(Loss)/profit before taxation |
(1,423) |
53,535 |
|
56,657 |
99,545 |
Tax
expense |
(17,695) |
(17,819) |
|
(25,780) |
(37,002) |
Net
(loss)/profit for the period |
(19,118) |
35,716 |
|
30,877 |
62,543 |
|
|
1 These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to “Non IFRS measures”
on page 24 for definitions.
2 Reflect the London PM fix price.
3 Negative sales quantities in 2017 relate to the
reversal of sales recorded during Q1 2017.
For further information, please visit our website:
http://www.acaciamining.com/ or contact:
Acacia Mining plc |
+44 (0) 207 129 7150 |
Peter Geleta, Chief Executive
Officer
Jaco Maritz, Chief Financial
Officer
Sally Marshak, Head of Investor
Relations and Communications
Camarco |
+44 (0) 20 3757 4980 |
Gordon Poole / Nick Hennis
About Acacia Mining plc
Acacia Mining plc (LSE:ACA) is the UK holding company of the
Acacia Group, Tanzania’s largest gold miner and one of the largest
producers of gold in Africa. The
Acacia Group has three mines, all located in north-west
Tanzania: Bulyanhulu, which is
owned and operated by Bulyanhulu Gold Mine Limited, Buzwagi, which
is owned and operated by Pangea Minerals Limited and North Mara,
which is owned and operated by North Mara Gold Mine Limited.
The Acacia Group also has a portfolio of exploration projects in
Kenya, Burkina Faso and Mali. 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 announcement.
Conference call
A presentation will be held for analysts and investors at 12.00
BST on 20 July 2018.
For those unable to attend, an audio webcast of the presentation
will be available on our website http://www.acaciamining.com/. For
those who wish to ask questions, the access details for the
conference call are as follows:
Participant dial in: |
+44 20 3936 2999 |
Password: |
69 32 26 |
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 on-going
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.
LSE: ACA
TABLE OF CONTENTS
|
|
Interim Operating
Review |
8 |
Exploration Review |
13 |
Financial Review |
17 |
Significant judgements in applying
accounting policies and key sources of estimation uncertainty |
23 |
|
|
Non-IFRS measures |
24 |
Risk Review |
28 |
Condensed Financial
Information: |
|
|
|
- Consolidated Income
Statement and Consolidated Statement of Comprehensive Income |
32/33 |
- Consolidated Balance
Sheet |
34 |
- Consolidated
Statement of Changes in Equity |
35 |
- Consolidated
Statement of Cash Flows |
36 |
- Notes to the
Condensed Financial Information |
37 |
|
|
|
|
Operating Review
Half Year Review
Acacia delivered first half production of 254,759 ounces of
gold, a decrease of 41% year on year, with sales ounces broadly in
line with production at 251,045 ounces. AISC of US$945 per ounce sold and cash cost of
US$701 per ounce sold were 6% and 21%
higher than H1 2017, respectively.
North Mara achieved production of 162,689 ounces of gold
for the first half, down 9% from H1 2017. This was a result of
lower average grades at the Gokona underground mine on account of a
higher proportion of mining taking place in the lower-grade West
Zone. Gold sold of 158,870 ounces for the half year was broadly in
line with production. AISC of US$903
per ounce sold was 23% higher than H1 2017 (US$736), due to higher cash costs and lower
sales volumes, partly offset by lower capitalised development
costs.
At Buzwagi, gold production of 73,100 ounces of gold was
42% lower than the comparative period in 2017 as a result of the
mine transitioning to a lower grade stockpile processing operation.
Gold sold for the period amounted to 72,305 ounces, in line with
production and 36% higher than H1 2017 when the mine was unable to
sell concentrate due to the export ban imposed in March 2017. AISC per ounce sold of US$1,037 was 35% higher than H1 2017
(US$770/oz), mainly driven by the
transition to processing lower grade stockpiles which drove higher
cash costs.
Bulyanhulu produced 18,970 gold ounces, 85% lower than
the same period in 2017. This was a result of the decision to place
the underground mine on reduced operations. All production resulted
from the reprocessing of tailings which was 6% higher compared to
H1 2017 due to higher throughput and recovery rates as a result of
operational efficiencies, partly offset by lower feed grades. Gold
sold for the period of 19,870 ounces was 5% higher than production
due to the selling of gold ounces on hand at the end of 2017 and
76% lower than H1 2017 mainly as a result of the lower production
base. AISC per ounce sold for the half of US$827 was 38% lower than H1 2017 (US$1,340/oz) driven by reduced operating and
capital spend, partly offset by lower sales, but excludes reduced
operations costs of US$16.6
million.
Total tonnes mined during the first half amounted to 8.2 million
tonnes, 55% lower than H1 2017, mainly as a result of the
transition to a stockpile processing operation at Buzwagi and the
placing of the underground mine at Bulyanhulu on reduced
operations. Total ore tonnes mined of 1.7 million tonnes were 77%
lower than H1 2017, mainly due to the reasons above.
Ore tonnes processed amounted to 4.6 million tonnes, a decrease
of 6% on H1 2017, mainly driven by the halting of run-of-mine
processing at Bulyanhulu.
Cash costs of US$701 per ounce
sold for the half were 21% higher than in H1 2017, primarily due
to:
- The drawdown of ore stockpiles at Buzwagi and a decreased
build-up in finished gold inventory compared to H1 2017
(US$369/oz), given H1 2017 was
impacted by the imposition of the concentrate export ban, resulting
in a build- up of finished gold inventory in H1 2017 of
approximately 115,000 ounces; and
- Lower production base (US$141/oz)
This was offset by:
- Savings in direct mining costs (US$410/oz) driven by the cessation of mining
activities at Buzwagi and Bulyanhulu, partly offset by higher
direct mining costs at North Mara, and lower sales related costs
(US$9/oz) driven by lower sales
volumes.
All-in sustaining cost of US$945
per ounce sold for the first half was 6% higher than H1 2017,
mainly due to the impact of lower sales volumes on individual cost
items (US$77/oz), higher cash costs
(refer to above) (US$124/oz), and a
smaller credit relating to the share based payment revaluation
driven by the reduction in Acacia’s share price (US$25/oz), partly offset by lower capitalised
expenditure relating to North Mara and Bulyanhulu (US$144/oz) and lower sustaining capital spend
mainly driven by Bulyanhulu being on reduced operations
(US$19/oz).
Cash generated from operating activities of US$58.9 million for H1 2018, an increase of
US$57.6 million from H1 2017
(US$1.3 million), mainly due to
working capital outflows of US$24.2
million compared to outflows of US$159.7 million in H1 2017 which resulted from
the build-up of concentrate stockpiles in H1 2017, partly offset by
lower adjusted EBITDA (US$74.6
million).
Capital expenditure amounted to US$51.3
million compared to US$92.5
million in H1 2017. The decrease was mainly driven by lower
capitalised development costs. Capital expenditure primarily
comprised capitalised development and stripping (US$27.9 million), investment in mobile equipment
and component change-outs mainly relating to North Mara
(US$8.9 million), capitalised
drilling for resource and reserve development at North Mara’s
Gokona underground (US$3.7 million),
and investment in fixed equipment and infrastructure (US$2.4 million).
Second Quarter Review
Acacia recorded two Lost Time Injuries during the quarter at
North Mara, one of which related to the fatality involving a
mechanic at the Gokona pit (please refer above). The Total
Recordable Frequency Rate (TRIFR) of 0.12 for the second quarter
was 76% lower than the corresponding period in 2017.
Production for Q2 2018 amounted to 133,778 ounces, a decrease of
36% on the same period in 2017, but 11% above Q1 2018.
North Mara produced 85,920 ounces, 3% higher than Q2 2017
(83,110 ounces) driven by marginally higher head grades compared to
Q2 2017 together with increased proportion of higher grade
underground tonnes being processed. Gold sold of 83,915 ounces for
the quarter was in line with production and in line with Q2 2017.
AISC of US$861 per ounce sold was 14%
higher than in Q2 2017 (US$758/oz) as
a result of higher cash costs and sustaining capital expenditure,
partly offset by lower capitalised development costs.
At Buzwagi, gold production for the second quarter of
37,415 ounces was 44% lower than Q2 2017 (66,228 ounces) as a
result of production now being derived solely from lower grade ore
stockpiles. Gold sold for the quarter of 39,845 ounces was 6%
higher than production due to the selling of gold ounces on hand at
the end of Q1 2018 and significantly higher than Q2 2017 due to the
inability to export concentrate following the export ban imposed in
March 2017. AISC per ounce sold of
US$1,025 was 35% higher than Q2 2017,
mainly driven by the transition to processing lower grade
stockpiles which drove higher cash costs due to a drawdown in ore
inventory and lower production.
Bulyanhulu produced 10,443 ounces, 82% lower than Q2
2017, as a result of the decision to place the underground mine on
reduced operations. All production resulted from the reprocessing
of tailings which was 18% higher than Q2 2017 (8,856 ounces) due to
process plant improvements. Gold sold for the quarter of 10,330
ounces was in line with the production base and 62% lower than H1
2017, as a result of the lower production base. AISC per ounce sold
for the quarter of US$737 was 53%
lower than Q2 2017 (US$1,558/oz)
driven by reduced operating and capital spend, partly offset by
lower sales, but excludes reduced operations costs of US$8.4 million.
Total tonnes mined during the quarter amounted to 4.2 million
tonnes, 51% lower than Q2 2017, mainly as a result of the
transition to a stockpile processing operation at Buzwagi and the
halting of all underground mining at Bulyanhulu. Tonnes mined at
North Mara were in line with the Q2 2017. Total ore tonnes mined of
0.8 million tonnes were 79% lower than Q2 2017, primarily due to
the cessation of mining at Buzwagi and Bulyanhulu.
Ore tonnes processed amounted to 2.4 million tonnes, broadly in
line with Q2 2017, with head grade for the quarter (excluding
tailings retreatment) of 2.1g/t, 36% lower than Q2 2017 (3.3g/t)
due to low-grade stockpile processing at Buzwagi and no underground
material from Bulyanhulu.
Capital expenditure for the quarter amounted to US$25.5 million compared to US$45.6 million in Q2 2017, a decrease of 44%.
Capital expenditure primarily comprised capitalised development and
stripping at North Mara (US$12.4
million), mobile equipment and component change-outs at
North Mara (US$5.2 million),
capitalised drilling at North Mara (US$2.1
million), investment in Buzwagi’s tailings storage facility
(US$0.7 million) and Bulyanhulu
optimisation study costs (US$0.8
million).
Mine Site Review
North Mara
Key statistics
|
|
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
|
2018 |
2017 |
|
2018 |
2017 |
Key operational
information: |
|
|
|
|
|
|
Ounces
produced |
oz |
85,920 |
83,110 |
|
162,689 |
179,578 |
Ounces
sold |
oz |
83,915 |
84,390 |
|
158,870 |
178,130 |
Cash
cost per ounce sold1 |
US$/oz |
570 |
476 |
|
588 |
441 |
AISC
per ounce sold1 |
US$/oz |
861 |
758 |
|
903 |
736 |
Open pit: |
|
|
|
|
|
|
Tonnes
mined |
Kt |
3,974 |
3,896 |
|
7,814 |
7,750 |
Ore
tonnes mined |
Kt |
657 |
733 |
|
1,308 |
1,536 |
Mine
grade |
g/t |
2.2 |
1.7 |
|
1.9 |
1.8 |
Underground: |
|
|
|
|
|
|
Ore
tonnes trammed |
Kt |
184 |
162 |
|
371 |
316 |
Mine
grade |
g/t |
8.3 |
8.4 |
|
8.0 |
9.0 |
Processing
information: |
|
|
|
|
|
|
Ore
milled |
Kt |
701 |
709 |
|
1,410 |
1,419 |
Head
grade |
g/t |
4.1 |
4.0 |
|
3.9 |
4.3 |
Mill
recovery |
% |
92.8% |
92.3% |
|
92.5% |
92.5% |
Cash
cost per tonne milled1 |
US$/t |
68 |
57 |
|
66 |
55 |
Capital
Expenditure |
|
|
|
|
|
|
- Sustaining capital2 |
US$('000) |
7,993 |
5,921 |
|
13,681 |
12,177 |
- Capitalised development |
US$('000) |
12,364 |
15,485 |
|
27,932 |
33,282 |
- Expansionary capital |
US$('000) |
2,143 |
2,953 |
|
3,668 |
4,489 |
|
|
22,500 |
24,359 |
|
45,281 |
49,948 |
- Non-cash
reclamation asset adjustments |
US$('000) |
(1,032) |
(180) |
|
(1,165) |
(56) |
Total capital
expenditure |
US$('000) |
21,468 |
24,179 |
|
44,116 |
49,892 |
1These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to ‘Non-IFRS measures”
on page 24 for definitions.
2 Includes land purchases recognised as long term
prepayments.
Operating performance
Gold production for the first half of 162,689 ounces was 9%
lower than H1 2017. The reduction primarily stemmed from lower
average grades at the Gokona underground mine on account of a
higher proportion of mining taking place in the lower-grade West
Zone. Gold ounces sold for the half of 158,870 ounces were 11%
lower than the prior period and broadly in line with
production.
Cash costs of US$588 per ounce
sold were 33% higher than H1 2017 (US$441/oz), mainly driven by increased direct
operating costs (US$102/oz), mainly
relating to higher external services costs and higher maintenance
costs; as well as higher sales related costs linked to the increase
in the royalty rate and the average gold price (US$32/oz) and the lower production base
(US$15/oz).
AISC of US$903 per ounce sold was
23% higher than H1 2017 (US$736/oz)
primarily as a result of higher cash costs discussed above together
with the impact of lower sales volumes on individual cost items
(US$36/oz), partly offset by lower
capitalised development costs (US$34/oz).
We continued to undertake drilling programmes at Gokona during
the period as we look to demonstrate the long term potential of the
deposit and are also undertaking a pre-feasibility study at
Nyabirama in tandem with the permitting for an underground
exploration decline as we explore the potential for a second
underground mine at North Mara.
Capital expenditure for the period before reclamation
adjustments amounted to US$45.3
million, 9% lower than in H1 2017 (US$49.9 million). Key capital expenditure
included capitalised stripping costs (US$18.2 million), capitalised underground
development costs (US$9.7 million),
capitalised drilling mainly for resource and reserve development at
Gokona underground (US$3.7 million)
and investment in mobile equipment and component change-outs
(US$8.9 million).
Buzwagi
Key statistics
|
|
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
|
2018 |
2017 |
|
2018 |
2017 |
Key operational
information: |
|
|
|
|
|
|
Ounces
produced |
oz |
37,415 |
66,228 |
|
73,100 |
126,084 |
Ounces
sold |
oz |
39,845 |
15,895 |
|
72,305 |
53,094 |
Cash
cost per ounce sold1 |
US$/oz |
964 |
705 |
|
964 |
697 |
AISC
per ounce sold1 |
US$/oz |
1,025 |
762 |
|
1,037 |
770 |
Copper
production |
Klbs |
- |
3,095 |
|
- |
6,253 |
Copper
sold2 |
Klbs |
- |
(826) |
|
- |
705 |
Mining
information: |
|
|
|
|
|
|
Tonnes
mined |
Kt |
- |
4,297 |
|
- |
9,564 |
Ore
tonnes mined |
Kt |
- |
2,898 |
|
- |
4,951 |
Processing
information: |
|
|
|
|
|
|
Ore
milled |
Kt |
1,255 |
1,119 |
|
2,256 |
2,195 |
Head
grade |
g/t |
1.0 |
1.9 |
|
1.1 |
1.8 |
Mill
recovery |
% |
90.1% |
96.6% |
|
89.2% |
96,7% |
Cash
cost per tonne milled1 |
US$/t |
31 |
10 |
|
31 |
17 |
Capital
Expenditure |
|
|
|
|
|
|
- Sustaining capital |
US$('000) |
881 |
724 |
|
2,181 |
865 |
- Non-cash
reclamation asset adjustments |
US$('000) |
(119) |
79 |
|
372 |
(1) |
Total capital
expenditure |
US$('000) |
762 |
803 |
|
2,553 |
864 |
1These are non-IFRS
financial performance measures with no standard meaning under IFRS.
Refer to “Non-IFRS measures” on page 24 for definitions.
2 Negative sales quantities
in 2017 relate to the reversal of sales recorded during Q1
2017.
Operating performance
Gold production for the first half of 73,100 ounces was 42%
lower than the comparative period in 2017 as a result of Buzwagi
transitioning primarily to a low-grade stockpile processing
operation compared to the processing of run-of-mine ore in the
previous period. Gold sold in H1 2018 amounted to 72,305 ounces, in
line with production and 36% higher than H1 2017 due to the
inability to sell concentrate following the export ban in H1
2017.
Whilst lower than H1 2017, production was ahead of plan driven
by higher than expected recoveries of 89.2% and throughput being
above nameplate capacity. Grades of 1.1 g/t for the period were in
line with expectations for the period. Following Buzwagi’s
transition to primarily a stockpile processing operation, there was
no copper production and therefore no copper sales during the half.
During the period Buzwagi continued to engage closely with
Government agencies around correspondence received from the
Ministry of Minerals during Q1 2018 requiring the restoration of
operation of the flotation circuit, which ceased in September 2017. With primarily only low-grade
stockpiles planned to be processed through the remaining life of
mine, there are no plans to resume flotation circuit
operations.
There were no ore tonnes mined from the open pit in H1 2018 but
at the beginning of Q3 2018 we started to mine the last ore blocks
from the main zone in the open pit. These tonnes were deferred from
Q4 2017 due to flooding of the bottom of the pit and were included
in guidance at the beginning of the year.
Cash costs for the first half of US$964 per ounce sold were 38% higher than H1
2017 (US$697/oz), mainly due to a
drawdown in ore inventory as a result of only processing ore
stockpiles and a smaller finished gold build up due to the impact
of the concentrate produced and not sold in H1 2017, offset by
higher sales volumes (US$751/oz),
partially offset by lower direct mining costs as a result of
Buzwagi transitioning to a stockpile processing operation
(US$534/oz).
AISC per ounce sold of US$1,037
was 35% higher than H1 2017 of US$770/oz, primarily driven by higher cash costs
as explained above (US$267/oz).
Capital expenditure before reclamation adjustments amounted to
US$2.2 million, higher than H1 2017
(US$0.9 million), mainly consisting
of the expansion of the tailings storage facilities (US$1.8 million) which started late in 2017.
Bulyanhulu
Key statistics
|
|
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
|
2018 |
2017 |
|
2018 |
2017 |
Key operational
information: |
|
|
|
|
|
|
Ounces
produced |
oz |
10,443 |
59,196 |
|
18,970 |
122,542 |
Ounces
sold |
oz |
10,330 |
27,409 |
|
19,870 |
81,214 |
Cash
cost per ounce sold1 |
US$/oz |
584 |
813 |
|
646 |
795 |
AISC
per ounce sold1 |
US$/oz |
737 |
1,558 |
|
827 |
1,340 |
Copper
production |
Klbs |
- |
1,313 |
|
- |
2,811 |
Copper
sold2 |
Klbs |
- |
(357) |
|
- |
599 |
Run-of-mine: |
|
|
|
|
|
|
Underground ore tonnes hoisted |
Kt |
- |
204 |
|
- |
409 |
Ore
milled |
Kt |
- |
202 |
|
- |
423 |
Head
grade |
g/t |
- |
8.6 |
|
- |
8.5 |
Mill
recovery |
% |
- |
89.9% |
|
- |
90.7% |
Ounces
produced |
oz |
- |
50,340 |
|
- |
104,596 |
Cash
cost per tonne milled1 |
US$/t |
- |
91 |
|
- |
133 |
Reprocessed
tailings: |
|
|
|
|
|
|
Ore
milled |
Kt |
454 |
410 |
|
904 |
823 |
Head
grade |
g/t |
1.3 |
1.4 |
|
1.2 |
1.4 |
Mill
recovery |
% |
55.1% |
46.9% |
|
53.9% |
47.2% |
Ounces
produced |
oz |
10,443 |
8,856 |
|
18,970 |
17,946 |
Capital
Expenditure |
|
|
|
|
|
|
- Sustaining capital |
US$('000) |
754 |
4,387 |
|
2,109 |
8,599 |
- Capitalised development |
US$('000) |
- |
14,984 |
|
- |
31,054 |
- Expansionary capital |
US$('000) |
1,260 |
504 |
|
1,534 |
982 |
|
|
2,014 |
19,875 |
|
3,643 |
40,635 |
- Non-cash
reclamation asset adjustments |
US$('000) |
(14) |
(851) |
|
(1,746) |
191 |
Total capital
expenditure |
US$('000) |
2,000 |
19,024 |
|
1,897 |
40,826 |
1These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to ‘Non-IFRS measures”
on page 24 for definitions.
2 Negative sales quantities
in 2017 relate to the reversal of sales recorded during Q1
2017.
Operating performance
Gold production for H1 2018 of 18,970 ounces was 85% lower than
the same period in 2017. This was a result of the decision taken in
September 2017 to transition to
reduced operations at Bulyanhulu. Production consisted solely of
the reprocessing of tailings which was 6% higher compared to H1
2017 due to higher throughput and recovery rates as a result of
operational efficiencies, partly offset by lower feed grades. Gold
sold for the half of 19,870 ounces was 5% higher than production
due to the selling of gold ounces on hand at the end of 2017 and
76% lower than H1 2017 mainly as a result of the lower production
base. AISC per ounce sold for H1 of US$827 was 38% lower than H1 2017 (US$1,340/oz) driven by reduced operating and
capital spend, partly offset by lower sales, but excludes reduced
operations costs of US$16.6
million.
There were no copper production or sales for the period as a
result of the underground mine at Bulyanhulu being on reduced
operations.
Cash costs of US$646 per ounce
sold were 19% lower than H1 2017 (US$795), mainly due to lower direct mining costs
compared to the prior year period as a result of Bulyanhulu being
on reduced operations and lower sales related costs driven by lower
sales volumes, partly offset by the lower production base.
Capital expenditure for the first half before reclamation
adjustments amounted to US$3.6
million, significantly lower than H1 2017 (US$40.6 million) due to Bulyanhulu being on
reduced operations. Expansionary capital includes Bulyanhulu
optimisation study costs (US$0.8
million) and upgrades to processing facilities (US$0.6 million).
Exploration Review
Brownfield Exploration
North Mara
Gokona Underground
Activity on brownfield programmes in the first half of 2018 has
been restricted to underground diamond drilling at Gokona, North
Mara where a total of 21,071 metres of extension and infill
drilling were completed during H1 2018.
Drilling continued with four rigs on the programmes to define
the Upper Central zone beneath the open pit, with further
significant intercepts returned during the half including:
|
15.0m @ 13.2 g/t Au from 176m |
|
7.0m @ 53.1 g/t Au from 193m;
and |
|
17.0m @ 6.3 g/t Au from 225m |
|
14.6m @ 8.1 g/t Au from 190m
and |
|
26.0m @ 4.1 g/t Au from 222m |
|
10.0m @ 7.7 g/t Au from 174m |
|
10.0m @ 14.3 g/t Au from 174m |
|
20.0m @ 8.7 g/t Au from 157m |
|
14.0m @ 9.4g/t Au from 96m; and |
|
10.0m @ 10.9g/t Au from 234m |
|
11.0m @ 3.2g/t from 359m |
|
15.0m @ 3.6g/t Au from 185m |
|
10.0m @ 3.3g/t Au from 204m;
and |
|
30.0m @ 4.3g/t Au from 219m |
|
14.0m @ 6.0g/t Au from 95m |
|
17.5m @ 3.8g/t Au from 251m;
and |
|
10.0m @ 7.4g/t Au from 281m |
|
30.0m @ 4.6g/t Au from 163m;
and |
|
9.0m @ 11.1g/t Au from 201m |
|
31.0m @ 5.7g/t Au from 186m |
The additional drilling information from the Central zone
between the base of the open pit and the 1,000mRL elevation is
currently being incorporated into an update of the Mineral Resource
model. Initial development has already commenced on the 1040mRL and
1070mRL elevations into the defined Central Zone mineralisation.
Drilling continues with three drill rigs in the 1030 Exploration
Drive to test deeper mineralisation in the Central Zone.
The drilling programme testing the base of the second and the
top of the third panels of mineralisation in the West Zone at
Gokona continued during the half. Drilling continued to test the
third mining panel in the West during June. During the first half
several significant intersections were returned:
|
27.0m @ 3.6g/t Au from 203m |
|
7.0m @ 7.4g/t Au from 179m;
and |
|
33.0m @ 8.4g/t Au from 224m |
|
9.0m @ 15.9g/t Au from
116m |
|
13.0m @ 4.1 g/t Au from 237m;
and |
|
16.0m @ 3.5g/t Au from 289m |
|
9.0m @ 6.4g/t Au from 72m;
and |
|
14.0m @ 5.8g/t Au from 118m |
Greenfield Exploration
Kenya
One of the focuses of the exploration during H1 2018 was on
testing for structures within the Liranda Corridor, parallel to
Isulu, within five kilometres of the existing inferred resources in
order to expand the current inferred resource of 1.17Moz at
12.6g/t. During H1 2018 two diamond rigs were active across the
West Kenya Project with 22 holes drilled for 9,158 metres. In
addition, prospect focused geological mapping and multi-element
soil geochemical surveys were completed over several target
areas.
Liranda Corridor
During the half, nine diamond holes for 3,400 metres were
completed on the Isulu South East Prospect. These holes intersected
multiple shear zones with disseminated sulfides, quartz veining,
carbonate and sericite alteration. Mineralisation within shears of
similar orientation to the Isulu prospect were intersected as
targeted, however assays returned broad zones of lower-grade
mineralisation including:
- LCD0206:
20.5m @ 1.13 g/t Au from 44m; 1m @ 3.68g/ Au
from 62.5m
- LCD0209:
31.8m @ 1.29g/t Au from 201m incl. 7.7m @
3.05 g/t Au from 207 (Northern Zone).
- LCD0210:
13.5m @ 0.90 g/t Au from 281m incl. of 1m @
7.56g/t Au from 281m (Southern
Zone).
The Northern and Southern Zones comprise shear structures with
disseminated sulfides (pyrite, pyrrhotite, arsenopyrite,
chalcopyrite), quartz carbonate veining with carbonate, sericite
and minor green mica alteration. Detailed structural analysis and
modeling was completed towards the end of the first half.
Multi-element analysis of the soils collected in H1 2018 and
modeling of strong VTEM geophysical anomalies identified a ‘blind’
target between the Isulu and Bushiangala, the so-called GAP target.
Interpretation of the geophysical signature points to a mineralised
intrusive body. Drilling on this target started at the end of
June 2018.
Lake Zone
In the Lake Zone Camp geological mapping and soil geochemical
surveys were completed across several potential target areas with
promising results received from Ochiegue-Ramula and
Ramba-Lumba.
The Ochiegue-Ramula system consists of two targets:
Ramula prospect and Ochiegue corridor. These targets together,
situated only 1km apart, have a high potential for discovery of
>500,000 ounces of gold. Previously drilled (2015) Ramula
gold-bearing zones have been remodeled during the half and
estimation resulted in a non-classified exploration target estimate
of around 0.67Mt at 12.8g/t for 275Koz Au (uncapped), or 0.67Mt at
9.10g/t for 197Koz Au (30g/t capped) based on a Datamine block
model. In H1 2018 three diamond drill holes totaling 758 metres
were drilled to test continuity and extension of the Ramula
mineralised zones. All holes intercepted mineralisation with the
better visual results returned from RMD0002 where multiple specs of
visible gold were encountered. Assays are still outstanding and, if
positive, further work to improve the confidence in the resource
estimate will be undertaken in H2 2018.
The Ochiegue target comprises a complex mineralised
system hosted in intermediate volcanics and felsic intrusions. A
>3km long Au soil anomaly (20ppb-1.34 ppm Au) associated with
strong pathfinders (Te, W, As, Sb, Bi) has been identified in H1
2018. Four DD holes have been completed totaling 1,375 metres.
Multiple potential shear zones and veins of various orientations
have been intercepted by the holes hosted in the strongly altered
rocks. Diamond hole RMD0004 intercepted multiple specs of visible
gold in quartz veins. Assays are still outstanding.
The Ramba-Lumba target is characterised by multiple
parallel and anastomosing shear structures and quartz veins mapped
in a >3km long and up to 600m wide
corridor. The shallow parts of the mineralised shears were
partially mined in the 1980-1990s. Previously unknown ultramafic
and conglomerate rocks have been mapped and verified by the
multi-element soil anomalies. A total of four, widely spaced, DD
holes, totaling 1604 metres, were drilled into the target. All
holes intercepted strong alteration, sheared and mineralised
structures and quartz veining. Significant intersections:
- LZD0002: 1.5m @ 4.34g/t Au from
105m, 2.0m @ 30.7g/t Au from 109m incl.
- LZD0004: 1.0m @ 1.10g/t Au from
129m; 1.6m @ 6.40g/t Au from 225m
- LZD0006: 0.5m @ 2.65g/t Au from
328m; 1.0m @ 3.30g/t Au from 368m
- LZD0007: 2.1m @ 4.81g/t Au from
79m; 1.0m @ 1.33g/t Au from 97m; 2.7m @ 2.91g/t
Au from 102m
The holes are several hundred metres apart. It appears that
better grade is associated where an intrusive is located in the
vicinity and results will be followed up in the second half of the
year.
Burkina
Faso
During H1 2018 we continued to explore our properties in the
highly prospective Houndé Belt in southwest Burkina Faso. Acacia currently manages four
joint ventures covering over 2,700km².
South Houndé JV (Sarama Resources
Limited) – current interest 50%, next stage earn-in to 70%
Tankoro Corridor– MM and MC Zones
Drilling at Tankoro comprised air-core drilling at the Djimbaké
zone (southern part of the Tankoro Corridor) to test the continuity
of mineralisation along strike. 4,424 metres were drilled during
the half out of a programme total of 4,900 metres. The results
received show continuity of low grade mineralisation; best results
include 4m @ 1.2g/t Au from
22m in AC3702, 4m @ 1.4g/t Au from 20m in AC3703 and 6m @ 1.6g/t Au from 50m in AC3726.
During the first half air-core drilling was conducted at MM zone
with a total of 2,037 metres drilled. The aim of the programme was
to infill some of the better parts of the MM resource area to test
the potential for additional high grade zones.
Better results MM zone included:
- AC3743 6m @ 5.5g/t Au from
12m (including 3m @ 9.2g/t Au)
- AC3746 11m @ 3.6g/t Au from
13m (including 4m @ 8.5g/t Au)
- AC3752 14m @ 2.9g/t Au from
22m (including 2m @ 10g/t Au)
- AC3755 12m @ 2.7g/t Au from
38m (including 6m @ 3.9g/t Au)
- AC3759 12m @ 3g/t Au from
16m (including 6m @ 4.9g/t Au)
- AC3762 25m @ 1.4g/t Au from
5m
During the first half of the year SRK Consulting (UK) Limited
(SRK) were contracted to update the mineral resource estimation,
based on the new 3D geology model. Preliminary results of the new
mineral resource estimation (MRE) appear to demonstrate an increase
in the geological inventory at the project. Recent results at MM
demonstrate the existence of additional high grade oxide zones
which are not included in the SRK work and are likely to add to the
mineralisation inventory.
Central Houndé JV (Thor Explorations Limited) – current interest
51%, next stage earn-in to 80%
Detailed field geological mapping and rock-chip sampling
continued on the Légué-Bongui Corridor and on the Ouéré soil
anomaly during H1 2018. Regional soil sampling covered the
north-western part of the Ouéré licence. A number of anomalies were
identified and are ready for air-core drilling.
The programme for the year on the Central Houndé project
comprises 11,500 metres of air-core drilling to test the continuity
of the gold mineralisation along strike and to test recently
identified soil anomalies. The drilling will be converted to
reverse circulation (RC) where ground conditions are not suitable.
For logistical reasons, drilling at Central Houndé will be
conducted in Q4 2018 after the wet season finishes.
Pinarello & Konkolikan JV (Canyon Resources Limited) – 100%
interest
The programme for the year on the Pinarello & Konkolikan
project comprises 30,000 metres of air-core drilling to test the
continuity of the gold mineralisation along strike on the priority
targets (Tankoro Corridor South, Tangolobé and Gagnhy).
Following an IP geophysical survey, comprising 53 line
kilometres, conducted on the Tangolobé target, a drilling programme
started in mid-June on the Western part of the project. The
programme consists of 14,200 metres of air-core (to be converted to
RC where adverse ground conditions are encountered) and is aimed to
test the continuity of the gold mineralisation on the southern
extension of the Tankoro Corridor and to test regional soil
anomalies.
Frontier JV (Metallor SA) – earning 100% through option
payments
No field work was conducted on the Frontier project in H1 2018.
A number of strong targets have already been identified. These
targets will be followed up after the wet season ends in H2 2018
with 6,000 metres of air-core drilling.
Mali
During H1 2018 we continued to explore our properties in the
highly prospective Senegal-Mali Shear Zone (SMSZ) in southwest
Mali. Acacia currently manages two
joint ventures and holds one permit covering a total of 191km².
Tintinba-Bané Project JV (Demba
Camara and Cadem Gold) – 100% interest
The Tintinba-Bane Project consists of three permits covering
approximately 150km2. These properties are located
within the Kénéiba Inlier of Western
Mali, along the world class Senegal-Mali-Shear-Zone (SMSZ), which hosts
more than 50 million ounces of gold endowment.
During the half detailed geology and regolith mapping, rock-chip
sampling and portable XRF measurements have been conducted to
assess the potential of the existing targets and to outline new
drilling targets.
A drilling programme started in mid-June that consists of 5,000
metres of air-core (to be converted to RC where adverse ground
conditions) and is aimed at testing a number of regional soil
anomalies.
Boubou JV (Mande Empire) – earning 100% through option
payments
The Boudala JV is a joint venture with a local company over the
Bou Bou licence located approximately 15 kilometres 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 (SMSZ). Acacia can earn up to 100% of the project through a
series of staged payments over a period of 36 months.
During H1 2018 a regional soil sampling survey, accompanied by
geology and regolith mapping, was conducted over the licence.
Results are still outstanding at period end.
Gourbassi Est – 100% Acacia (ABG Exploration Mali SARL)
The licence is located immediately west of the Tintinba/Bane
Project in the central SMSZ 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 SMSZ. A regional soil sampling
survey, accompanied by geology and regolith mapping, started during
this quarter in the licence.
The exploration plan for the Gourbassi project in 2018 comprises
1,500 metres of air-core drilling and 3,000 soil samples. The aim
of the programme is to generate exploration targets.
Financial Review
The financial performance of the Group has been impacted by the
planned transitioning of Buzwagi to a primarily low grade stockpile
processing operation and the transition of Bulyanhulu to reduced
operations, which is evident in the half year results when compared
to the corresponding period in 2017. In an effort to minimise the
impact of the challenging operating environment, we have further
increased our focus on cost control and optimising working capital
and capital allocation. The key aspects of our financial
performance over the first half of 2018 are summarised below, and
should be read in conjunction with the consolidated condensed
interim financial information:
- Revenue of US$333.4 million was
US$58.3 million lower than H1 2017
driven by the 20% decrease in sales volumes that resulted from the
lower production base, partly offset by an 8% increase in the net
average realised gold price.
- Cash costs increased to US$701
per ounce sold in the first half of 2018 from US$577 per ounce sold in H1 2017, driven by the
drawdown in ore inventory at Buzwagi and a smaller build-up in
finished gold inventory compared to H1 2017, due to the impact of
the build-up in concentrate on hand after the imposition of the
concentrate export ban, the lower production base and lower
co-product revenue, partly offset by lower direct mining
costs.
- AISC at US$945 per ounce sold was
6% higher than in H1 2017 (US$893 per
ounce sold), mainly due to higher cash costs, the impact of lower
sales volumes on individual cost items and lower non-cash share
based payment revaluation credits, partly offset by lower
capitalised development costs at Bulyanhulu and North Mara and
lower sustaining capital expenditure at Bulyanhulu.
- As a result of the above, EBITDA decreased by 17% to
US$133.6 million, after being offset
by lower other charges (mainly due to the gain on sale of a
non-core mineral royalty for US$45.0
million), lower exploration expenditure and lower corporate
administration costs.
- An impairment charge of US$24.2
million related to the Nyanzaga exploration project in
Tanzania, following the post
period end conditional agreement to sell the Group’s stake in the
project.
- Lower tax expense of US$25.8
million compared to the prior year expense of US$37.0 million. The current year charge is
driven by lower year to date profitability. Included in the current
year tax expense is a 2017 final North Mara tax charge of
US$3.1 million.
- As a result of the above, net earnings amounted to US$30.9 million, 51% lower than US$62.5 million in H1 2017.
- Adjusted net earnings of US$13.5
million were US$52.4 million
lower than H1 2017. Adjusted earnings per share amounted to US3.3
cents, down from US16.1 cents in H1 2017.
- Operational cash flow of US$58.9
million increased by US$57.6
million from H1 2017, primarily as a result of lower working
capital cash outflows due to the build-up of concentrate on hand
which impacted H1 2017, partly offset by lower adjusted
EBITDA.
The following review provides a detailed analysis of our
consolidated results for the 6 months ended 30 June 2018 and the main factors affecting
financial performance. It should be read in conjunction with the
unaudited condensed consolidated financial information and
accompanying notes on pages 32 to 55, which have been prepared in
accordance with International Financial Reporting Standards as
adopted for use in the European Union (“IFRS”).
Revenue
Revenue for H1 2018 of US$333.4
million was US$58.3 million
lower than H1 2017 due to a 20% decrease in gold sales volumes
(61,393 ounces) mainly from Bulyanhulu and North Mara, partly
offset by an increase in sales volumes from Buzwagi as the mine was
able to sell all of its production in H1 2018 following the
decision to switch off the flotation circuit in H2 2017; and an 8%
increase in the average net realised gold price from US$1,235 per ounce sold in H1 2017 to
US$1,328 in H1 2018.
The net realised gold price for the year to date of US$1,328/oz was US$10/oz higher than the average market price of
US$1,318/oz due to the recognition of
realised gains on the gold put options of US$1.7 million for H1 2017 as a result of the
strike price of the put options of US$1,320/oz exceeding the average market price
for the period.
Included in total revenue is co-product revenue of US$1.7 million for H1 2018 relating to silver
sales, 70% lower than the prior period (US$5.8 million), as a result of the lack of
concentrate sales from early March
2017. There were no copper sales since the concentrate
export ban commenced and copper production also ceased from
September 2017.
The concentrate ban has resulted in unsold concentrate on hand
of approximately 186,000 ounces of gold, 12.1 million pounds of
copper and 159,000 ounces of silver. These contained metals are in
a condition to be sold, and will deliver revenue, net of government
royalties, of approximately US$257
million (at the average year to date spot gold price).
Cost of sales
Cost of sales was US$221.2 million
for H1 2018, representing a decrease of 9% on the prior year period
(US$244.0 million). The key aspects
impacting the cost of sales for the year include a 22% decrease in
depreciation and amortisation costs as a result of the lower
production base and carrying value of assets (after the 2017
impairment) at Bulyanhulu, 6% reduction in direct mining costs,
primarily driven by the reduced operations at Bulyanhulu coupled
with the move to stockpile processing at Buzwagi and the continuing
focus on cost control.
The table below provides a breakdown of cost of sales:
(US$'000) |
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
Cost of Sales |
|
|
|
|
|
Direct
mining costs |
79,163 |
61,527 |
|
150,153 |
160,310 |
Third
party smelting and refining fees |
758 |
1,417 |
|
2,027 |
6,738 |
Realised (gains)/ losses on economic hedges1 |
(238) |
170 |
|
(238) |
278 |
Royalty expense |
13,548 |
8,040 |
|
25,699 |
18,682 |
Realised gains on gold hedges |
(1,662) |
- |
|
(1,662) |
- |
Depreciation and amortisation2 |
21,257 |
23,417 |
|
45,247 |
57,959 |
Total |
112,826 |
94,571 |
|
221,226 |
243,967 |
1 Economic hedges include zero
cost collars for brent crude and, in prior years, copper.
2 Depreciation and amortisation
includes credits relating to the depreciation component of the cost
of inventory build-up for Q2 2018 of US$0.6
million (Q2 2017 US$12.8
million) and for H1 2018 of US$0.9
million (H1 2017 US$15.8
million.)
A detailed breakdown of direct mining expenses is shown in the
table below:
(US$'000) |
|
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
|
2018 |
2017 |
|
2018 |
2017 |
Direct mining costs |
|
|
|
|
|
|
Labour |
|
11,532 |
23,859 |
|
23,703 |
47,261 |
Energy
and fuel |
|
14,646 |
21,161 |
|
28,974 |
44,604 |
Consumables |
|
16,188 |
22,262 |
|
31,613 |
47,168 |
Maintenance |
|
11,404 |
26,357 |
|
24,428 |
52,123 |
Contracted services |
|
21,740 |
33,483 |
|
44,816 |
69,497 |
General administration costs |
|
6,910 |
21,788 |
|
15,810 |
42,309 |
Gross direct mining costs |
|
82,420 |
148,910 |
|
169,344 |
302,962 |
Capitalised mining costs |
|
(3,257) |
(87,383) |
|
(19,191) |
(142,652) |
Total direct mining costs |
|
79,163 |
61,527 |
|
150,153 |
160,310 |
Gross direct mining costs of US$169.3
million for H1 2018 were 44% lower than H1 2017
(US$303.0 million). The overall
decrease was driven by the impact of the changes in mining
activities at Bulyanhulu and Buzwagi, partly offset by an increase
in costs at North Mara as follows:
- An increase in maintenance cost driven by breakdowns and
unplanned maintenance at both the open pit and underground.
- Higher underground contracted services costs at Gokona due to
improved ground support activities and higher ore development
tonnes mined by the contractor.
- Higher energy and fuel costs driven by increased power
generation as a result of increased underground mining
activities.
- Increased consumables mainly driven by higher explosive and
underground support materials.
Capitalised direct mining costs, consisting of capitalised
development costs and investment in inventory is made up as
follows:
(US$'000) |
|
|
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
|
|
2018 |
2017 |
|
2018 |
2017 |
Capitalised direct mining costs |
|
|
|
|
|
|
|
Capitalised development costs |
|
|
(11,222) |
(25,962) |
|
(25,710) |
(56,530) |
Drawdown/ (investment) in inventory |
|
|
7,965 |
(61,420) |
|
6,519 |
(86,122) |
Total capitalised direct mining costs |
|
|
(3,257) |
(87,382) |
|
(19,191) |
(142,652) |
Total capitalised direct mining costs were 87% lower than H1
2017, primarily driven by a drawdown in ore inventory at Buzwagi in
H1 2018 compared to the build-up of concentrate ounces at
Bulyanhulu and Buzwagi in H1 2017, combined with a decrease in
capitalised development costs mainly driven by the cessation of
development activities at Bulyanhulu and the lower stripping costs
at North Mara, as a result of a lower strip ratio at the Nyabirama
pit.
Central costs
Total central costs amounted to US$9.9
million for H1 2018, a significant increase on H1 2017
(US$4.7 million) mainly driven by a
lower non-cash share based payment revaluation credit compared to
the prior period which saw a greater decrease in the share price
and share price performance compared to the global mining index,
impacting on the valuation of future share-based payment
liabilities to employees. This was partly offset by a 10% decrease
in corporate administration costs mainly as a result of lower
labour costs across all corporate offices and the increased focus
on cost control.
(US$'000) |
|
|
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
|
|
2018 |
2017 |
|
2018 |
2017 |
Corporate administration |
|
|
5,846 |
5,878 |
|
11,304 |
12,520 |
Share-based payments |
|
|
121 |
(18,209) |
|
(1,406) |
(7,785) |
Total central costs |
|
|
5,967 |
(12,331) |
|
9,898 |
4,735 |
Exploration and
evaluation costs
Exploration and evaluation costs of US$7.2 million were incurred in H1 2018, 55%
lower than the US$16.2 million spent
in H1 2017 in line with the reduced budget for the year.
Corporate social
responsibility expenses
Corporate social responsibility costs incurred for H1 2018
amounted to US$3.1 million compared
to the prior year of US$3.7 million.
Corporate social responsibility overheads and central initiatives
in H1 2018 amounted to US$1.6 million
and were lower than US$2.3 million in
H1 2017. General community projects funded from the Acacia
Maendeleo Fund amounted to US$1.5
million, in line with H1 2017 (US$1.4
million).
Impairment
charges
After the reporting period, OreCorp, Acacia’s JV partner in the
Nyanzaga Project, has executed its option under the earn-in
agreement to increase its stake to 51% in the project through the
payment of US$3.0 million to Acacia.
Further to that, Acacia has signed a conditional agreement to
transfer its remaining 49% stake to OreCorp for US$7.0 million and a net smelter royalty capped
at US$15 million based on future
production. This has resulted in Acacia recording an impairment
charge of US$24.2 million for the
Nyanzaga Project. Refer to Note 6 of the condensed consolidated
financial information for further details.
Other charges
Other charges in H1 2018 amounted to US$3.6 million, compared to US$19.6 million in H1 2017. The main contributors
include Bulyanhulu reduced operations costs not included within
all-in-sustaining costs of US$16.6
million, legal fees driven by the concentrate export ban and
historical outstanding tax matters of US$15.9 million, foreign exchange losses of
US$4.7 million and once-off legal
settlement costs relating to a North Mara village royalty
settlement of US$3.0 million. The
charges were largely offset by the gain on the sale of a non-core
mineral royalty of US$45.0
million.
Finance expense
and income
Finance expense of US$8.2 million
for H1 2018 was 51% higher than in H1 2017 (US$5.5 million), mainly driven by the premium
paid on gold put options. The key components were the premium paid
on gold put options of US$3.0
million, accretion expenses of US$1.8
million relating to the discounting of the environmental
rehabilitation liability, US$1.2
million relating to the servicing of the US$150 million undrawn revolving credit facility
and borrowing costs relating to the Bulyanhulu CIL facility of
US$1.1 million which were lower than
the prior year due to a lower outstanding facility following
capital repayments. Other costs include bank charges and interest
on bank accounts.
Finance income relates predominantly to interest charged on
non-current receivables and interest received on money market
funds. Refer to note 8 of the condensed financial information for
details.
Taxation
matters
The total income tax charge of US$25.8
million was lower than the prior year expense of
US$37.0 million. The current tax
charge was predominantly made up of current year income tax for
North Mara, driven by year to date profitability, in combination
with deferred tax charges of US$5.9
million (2017: US$5.2 million)
which reflects movements in temporary differences. Included in the
current year tax expense is a 2017 final North Mara tax charge of
US$3.1 million. The effective tax
rate in H1 2018 amounted to 46% compared to 37% in H1 2017.
During H1 2018, we made provisional corporate tax payments of
US$19.1 million relating to North
Mara, which is based on the pro rata portion of North Mara’s
expected full year profitability. These provisional corporate tax
payments have been offset against the indirect tax receivable
covered under the Memorandum of Settlement entered into with the
Tanzanian Government in 2011, and as a result, were not paid in
cash. In addition, during H1 2018 we have also offset US$4.2 million relating to the 2017 final
corporate tax payment.
Net earnings and
earnings per share
As a result of the factors discussed above, net earnings for H1
2018 were US$30.9 million, against
the prior year earnings of US$62.5
million.
Earnings per share for H1 2018 amounted to US7.5 cents, a
decrease of US7.8 cents from the prior year earnings per share of
US15.3 cents. The decrease was driven by the lower earnings, with
no change in the underlying issued shares.
Adjusted net
earnings and adjusted earnings per share
Adjusted net earnings for the first half was US$13.5 million compared to US$65.9 million in H1 2017. Net earnings in the
periods as described above have been adjusted for the impact of
items such as impairment charges, restructuring costs, gain on the
sale of a non-core mineral royalty and once-off legal settlements.
Refer to page 26 for reconciliation between net earnings and
adjusted net earnings.
Adjusted earnings per share for H1 2018 amounted to US3.3 cents,
a decrease of US12.8 cents from H1 2017 adjusted earnings per share
of US16.1 cents.
Financial position
Acacia had cash and cash equivalents on hand of US$120.1 million as at 30
June 2018 (US$80.5 million as
at 31 December 2017) with net cash of
US$63.3 million, up by US$53.8 million from 31
December 2017. The Group’s cash and cash equivalents are
with counterparties whom the Group considers to have an appropriate
credit rating. Location of credit risk is determined by physical
location of the bank branch or counterparty. Investments are held
mainly in United States dollars,
with cash and cash equivalents in other foreign currencies
maintained for operational requirements.
During 2013, a US$142 million
facility (“Facility”) was put in place to fund the bulk of the
costs of the construction of the Bulyanhulu tailings retreatment
project (“Project”). The Facility is collateralised by the Project,
and has a term of seven years with a spread over Libor of 250 basis
points. The seven year Facility is repayable in equal instalments
(bi-annual) over the term of the Facility, after a two year
repayment holiday period. The interest rate has been fixed at 3.6%
through the use of an interest rate swap. The full facility of
US$142 million was drawn in 2013.
During 2018, the 6th repayment amounting to US$14.2 million in total was made. At
30 June 2018, the outstanding capital
balance is US$56.8 million
(31 December 2017: US$71.0 million).
The above complements the existing undrawn revolving credit
facility of US$150 million, which
runs until November 2019.
The net book value of property, plant and equipment increased
from US$771 million as at
31 December 2017 to US$774 million as at 30
June 2018 mainly as a result of capital expenditure of
US$47.4 million as explained below,
offset by depreciation charges of US$43.6
million. Refer to note 13 to the condensed financial
information for further details.
The current portion of inventories increased from US$291.9 million as at 31
December 2017 to US$296.6
million as at 30 June 2018.
This was mainly due to a build-up in supplies inventory and an
increase in finished gold doré on hand at North Mara, partly offset
by a decrease in ore stockpiles due to Buzwagi transitioning to a
low-grade stockpile processing operation and a decrease in gold in
circuit inventory at North Mara. Total finished gold ounces on hand
of approximately 200,000 ounces as at 30
June 2018 comprised approximately 186,000 ounces of gold in
concentrate and 14,000 ounces of gold in doré.
Total indirect tax receivables increased from US$170.7 million as at 31
December 2017 to US$172.5
million as at 30 June 2018.
The increase was mainly due to VAT paid which was not refunded of
US$28.3 million, partly offset by
provisional corporate tax prepayments of US$19.1 million, a final corporate tax payment of
US$4.2 million at North Mara and
foreign exchange revaluation losses of US$3.2 million.
The net deferred tax position was an asset of US$64.0 million as at 30
June 2018 compared to the asset of US$70.0 million as at 31
December 2017. This was mainly as a result of temporary
differences at all sites in the current period.
Net assets increased from US$1.12
billion as at 31 December 2017
to US$1.15 billion as at 30 June 2018. The increase reflects the current
year income of US$30.9 million.
Cash flow generation and capital
management
Cash flow
(US$000) |
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
Cash
generated from/ (used in) operating activities |
34,912 |
(23,909) |
|
58,866 |
1,315 |
Cash
used in investing activities |
(21,472) |
(47,250) |
|
(4,511) |
(94,786) |
Cash
used in financing activities |
- |
(34,447) |
|
(14,200) |
(48,585) |
Increase/ (decrease) in cash |
13,440 |
(105,606) |
|
40,155 |
(142,056) |
Foreign exchange difference on cash |
92 |
50 |
|
(579) |
151 |
Opening cash balance |
106,557 |
281,442 |
|
80,513 |
317,791 |
Closing cash balance |
120,089 |
175,886 |
|
120,089 |
175,886 |
Cash flow from operating activities was US$58.9 million for H1 2018, an increase of
US$57.6 million from H1 2017
(US$1.3 million) mainly due to lower
working capital outflows of US$24.2
million compared to outflows of US$159.7 million in H1 2017 as a result of the
build-up in gold in concentrate ounces on hand in H1 2017, partly
offset by lower adjusted EBITDA (US$74.6
million).
The working capital outflow relates to a net increase in
indirect and corporate tax receivables of US$28.3 million, mainly driven by the lack of VAT
refunds, partly offset by an increase in trade and other payables
of US$4.4 million.
Cash flow used in investing activities was US$4.5 million for H1 2018, a decrease of
US$90.3 million compared to H1 2017
(US$94.8 million), driven by the
proceeds of the sale of a non-core royalty of US$45.0 million, lower capitalised development
and sustaining capital expenditure at Bulyanhulu due to reduced
operations, and lower capitalised stripping costs at North
Mara.
A breakdown of total capital and other investing capital
activities for 2018 is provided below:
(US$’000) |
Six months ended 30 June |
(Unaudited) |
2018 |
2017 |
|
|
|
Sustaining
capital |
(18,607) |
(30,204) |
Capitalised
development |
(27,932) |
(64,336) |
Expansionary
capital |
(5,202) |
(5,522) |
Total cash
capital |
(51,741) |
(100,064) |
Sale of mineral
royalty |
45,000 |
- |
Reclamation spend |
(3,258) |
(250) |
Non-current asset
movement1 |
5,488 |
5,528 |
Cash used in
investing activities |
(4,511) |
(94,786) |
Capital expenditure
reconciliation: |
|
|
Total cash
capital |
51,741 |
100,064 |
Land purchases |
130 |
1,247 |
Movement in capital
accruals |
(585) |
(8,855) |
Capital
expenditure |
51,286 |
92,456 |
Land purchases
classified as long term prepayments |
(130) |
(1,247) |
Non-cash
rehabilitation asset adjustment |
(2,539) |
134 |
Other non-cash capital
expenditure |
(1,244) |
(1) |
Total capital
expenditure per segment note |
47,373 |
91,342 |
1 Non-current asset movements relates to the movement
in Tanzania government
receivables, other long term assets
Sustaining capital
Sustaining capital expenditure includes investment in mobile
equipment and component change-outs at North Mara (US$8.9 million), investment in fixed equipment
and mining infrastructure at North Mara (US$2.4 million), expansion of the tailings
storage facility (US$1.8 million)
which started late 2017 at Buzwagi and the upgrade of the water
management ponds and essential plant upgrade costs US$1.0 million at Bulyanhulu.
Capitalised development
Capitalised development includes North Mara capitalised
stripping costs (US$18.2 million) and
capitalised underground development (US$9.7
million).
Expansionary capital
Expansionary capital expenditure consisted mainly of capitalised
expansion drilling at North Mara (US$3.7
million) and Bulyanhulu optimisation studies (US$0.8 million) and processing facilities
upgrades (US$0.6 million).
Non-cash capital
Non-cash capital was a negative US$4.4
million and consisted mainly of a decrease in capital
accruals, non-cash rehabilitation asset adjustments (US$2.5 million) driven by changes in US risk free
rates impacting discount rates and foreign exchange losses on
translation of asset balances.
Other investing capital
Other investing capital included the sale of a non-core mineral
royalty for proceeds of US$45.0
million, offset by rehabilitation expenditure incurred at
North Mara and Buzwagi of US$3.3
million and the movement in other non-current assets of
US$5.5 million. During H1 2018 North
Mara incurred negligible land purchases totalling US$0.1 million (H1 2017: US$1.2 million).
Cash flow used in financing activities for H1 2018 of
US$14.2 million, a decrease of
US$34.4 million from US$48.6 million in H1 2017, mainly as a result of
a final 2017 dividend not being paid. A payment of the
6th instalment of the borrowings for the Bulyanhulu CIL
facility totalling US$14.2 million
was made in Q1 2018.
Dividend
As a result of the uncertainty around a resolution of the
on-going disputes between the Company and the GoT and current
liquidity requirements, the Board of Directors has not recommended
an interim dividend for 2018.
Significant judgements in applying
accounting policies and key sources of estimation uncertainty
Many of the amounts included in the condensed consolidated
financial information require management to make judgements and/or
estimates. These judgements and estimates are continuously
evaluated and are based on management’s experience and best
knowledge of the relevant facts and circumstances, but actual
results may differ from the amounts included in the condensed
consolidated financial information included in this release.
Information about such judgements and estimation is included in the
accounting policies and/or notes to the consolidated financial
statements, and the key areas are summarised below.
Areas of judgement and key sources of estimation uncertainty
that have the most significant effect on the amounts recognised in
the condensed consolidated financial statements include:
- Estimates of the quantities of proven and probable gold and
copper reserves;
- Estimates included within the life-of-mine planning such as the
timing and viability of processing of long term stockpiles;
- The capitalisation of production stripping costs;
- The capitalisation of exploration and evaluation
expenditures;
- Review of goodwill, tangible and intangible assets’ carrying
value, the determination of whether a trigger for an impairment
review exist, whether these assets are impaired and the measurement
of impairment charges or reversals, and also includes the judgement
of reversal of any previously recorded impairment charges;
- The estimated fair values of cash generating units for
impairment tests, including estimates of future costs to produce
proven and probable reserves, future commodity prices, foreign
exchange rates and discount rates;
- The estimated useful lives of tangible and long-lived assets
and the measurement of depreciation expense;
- Recognition of a provision for environmental rehabilitation and
the estimation of the rehabilitation costs and timing of
expenditure;
- Whether to recognise a liability for loss contingencies and the
amount of any such provision;
- Whether to recognise a provision for accounts receivable, and
in particular the indirect tax receivables from the Tanzanian
Government, a provision for obsolescence on consumables inventory
and the impact of discounting the non-current element of the
indirect tax receivable;
- Recognition of deferred income tax assets, amounts recorded for
uncertain tax positions, the measurement of income tax expense and
indirect taxes;
- Determination of the cost incurred in the productive process of
ore stockpiles, gold in process, gold doré/bullion and concentrate,
as well as the associated net realisable value and the split
between the long term and short term portions;
- Determination of fair value of derivative instruments;
- Determination of fair value of share options and cash-settled
share-based payments;
- Judgements around the prospect, timing and final terms of any
comprehensive negotiated settlement that the Company might be able
to agree with the Government of Tanzania, including by reference to the key
terms of the Framework announcements made in October 2017 by Barrick and the GoT and including
judgements around the timing and quantum of any cash outflows that
might be made in respect of historical tax matters; and
- Judgements around the timing of Bulyanhulu’s restart and
production ramp up.
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 but 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$000) |
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
Gold
revenue |
175,919 |
160,231 |
|
331,665 |
385,859 |
Add:
Realised gold hedge gains |
1,662 |
- |
|
1,662 |
- |
Net
gold revenue |
177,581 |
160,231 |
|
333,327 |
385,859 |
Gold
sold (ounces) |
134,090 |
127,694 |
|
251,045 |
312,438 |
Net
average realised gold price (US$/ounce) |
1,324 |
1,255 |
|
1,328 |
1,235 |
Cash cost per ounce sold is a non-IFRS financial measure.
Cash costs include all costs absorbed into inventory, as well as
royalties, and production taxes, and exclude capitalised production
stripping costs, inventory purchase accounting adjustments,
unrealised gains/losses from non-hedge currency and commodity
contracts, depreciation and amortisation and corporate social
responsibility charges. Cash cost is calculated net of co-product
revenue. Cash cost per ounce sold is calculated by dividing the
aggregate of these costs by total ounces sold.
The presentation of these statistics in this manner allows
Acacia to monitor and manage those factors that impact production
costs on a monthly basis. Cash costs and cash cost per ounce sold
are calculated on a consistent basis for the periods presented.
The table below provides a reconciliation between cost of sales
and total cash cost to calculate the cash cost per ounce sold.
(US$'000) |
|
|
Three months ended 30 June |
|
Six months ended 30 June |
(Unaudited) |
|
|
2018 |
2017 |
|
2018 |
2017 |
Total cost of sales |
|
|
112,826 |
94,571 |
|
221,226 |
243,967 |
Deduct: depreciation and amortisation* |
|
|
(21,257) |
(23,417) |
|
(45,247) |
(57,959) |
Add:
realised gains on gold hedges |
|
|
1,662 |
- |
|
1,662 |
- |
Deduct: Co-product revenue |
|
|
(946) |
2,468 |
|
(1,717) |
(5,805) |
Total cash cost |
|
|
92,285 |
73,622 |
|
175,924 |
180,203 |
|
|
|
|
|
|
|
|
Total
ounces sold |
|
|
134,090 |
127,694 |
|
251,045 |
312,438 |
Total cash cost per ounce sold (US$/ounce) |
|
|
688 |
577 |
|
701 |
577 |
|
|
|
|
|
|
|
|
|
* Depreciation and amortisation includes the depreciation
component of the cost of inventory sold.
All-in sustaining cost (AISC) per ounce sold 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 30 June 2018 |
|
Three months ended 30 June 2017 |
(US$/oz sold) |
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
Cash
cost per ounce sold |
584 |
570 |
964 |
688 |
|
813 |
476 |
705 |
577 |
|
Corporate administration |
35 |
32 |
24 |
44 |
|
44 |
21 |
81 |
46 |
|
Share
based payments |
- |
- |
- |
1 |
|
(38) |
(13) |
(78) |
(143) |
|
Rehabilitation |
28 |
8 |
6 |
9 |
|
23 |
10 |
11 |
13 |
|
CSR
expenses |
17 |
8 |
8 |
11 |
|
9 |
10 |
(3) |
12 |
|
Capitalised development |
- |
147 |
- |
92 |
|
547 |
184 |
- |
239 |
|
Sustaining capital |
73 |
96 |
23 |
73 |
|
160 |
70 |
46 |
91 |
|
Total
AISC |
737 |
861 |
1,025 |
918 |
|
1,558 |
758 |
762 |
835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* The group total includes a cost of
US$18/oz in Q2 2018 mainly related to
corporate costs incurred, and a credit of US$95/oz in Q2 2017.
(Unaudited) |
Six months ended 30 June 2018 |
|
Six months ended 30 June 2017 |
(US$/oz sold) |
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
Cash
cost per ounce sold |
646 |
588 |
964 |
701 |
|
795 |
441 |
697 |
577 |
|
Corporate administration |
43 |
37 |
32 |
45 |
|
36 |
23 |
48 |
40 |
|
Share
based payments |
(21) |
(1) |
(3) |
(6) |
|
(4) |
(2) |
(6) |
(25) |
|
Rehabilitation |
28 |
8 |
6 |
9 |
|
16 |
10 |
7 |
11 |
|
CSR
expenses |
25 |
10 |
8 |
13 |
|
8 |
8 |
7 |
12 |
|
Capitalised development |
13 |
176 |
- |
112 |
|
382 |
187 |
- |
206 |
|
Sustaining capital |
93 |
85 |
30 |
71 |
|
107 |
69 |
17 |
72 |
|
Total
AISC |
827 |
903 |
1,037 |
945 |
|
1,340 |
736 |
770 |
893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* The group total includes a cost of
US$9/oz in H1 2018 mainly related to
corporate costs incurred, and a credit of US$5/oz in H1 2017.
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.
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 30 June |
|
Six months ended 30 June |
(Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
Net
profit/(loss) for the period |
(19,118) |
35,716 |
|
30,877 |
62,543 |
Plus
income tax expense/(credit) |
17,695 |
17,819 |
|
25,780 |
37,002 |
Plus
depreciation and amortisation1 |
21,257 |
23,417 |
|
45,247 |
57,959 |
Plus:
impairment charges/write-offs2 |
24,234 |
- |
|
24,234 |
- |
Plus
finance expense |
4,404 |
3,216 |
|
8,240 |
5,454 |
Less
finance income |
(676) |
(946) |
|
(808) |
(1,543) |
EBITDA |
47,796 |
79,222 |
|
133,570 |
161,415 |
Adjusted for: |
|
|
|
|
|
Restructuring costs |
- |
2,477 |
|
- |
3,304 |
Gain
on sale of non-core mineral royalty |
- |
- |
|
(45,000) |
- |
One
off legal settlements |
- |
1,500 |
|
3,030 |
1,500 |
Adjusted EBITDA |
47,796 |
83,199 |
|
91,600 |
166,219 |
1 Depreciation and amortisation
includes the depreciation component of the cost of inventory
sold.
2 Refer to note 6 of the
condensed financial information.
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.
EBIT is a non-IFRS financial measure and reflects EBITDA
adjusted for depreciation and amortisation and 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 30 June |
|
Six months ended 30 June |
|
(Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
Net
earnings/(loss) |
(19,118) |
35,716 |
|
30,877 |
62,543 |
Adjusted for: |
|
|
|
|
|
Gain
on sale of non-core mineral royalty |
- |
- |
|
(45,000) |
- |
Restructuring cost |
- |
2,477 |
|
- |
3,304 |
Impairment charges/write-offs1 |
24,234 |
- |
|
24,234 |
- |
Once-off legal settlements2 |
- |
1,500 |
|
3,030 |
1,500 |
Tax
impact of the above |
- |
(1,193) |
|
378 |
(1,441) |
Adjusted net earnings |
5,116 |
38,500 |
|
13,519 |
65,906 |
1 The impairment charge was recognised as a result of the
revaluation of Acacia’s remaining stake in the Nyanzaga
Project.
2 Once-off legal settlements relate to the North Mara royalty
settlement.
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.
Risk Review
We have made a number of further developments in the
identification and management of our risk profile over the course
of H1 2018. Our principal risks have continued to fall within four
broad categories: strategic risks, financial risks, external risks
and operational risks. Generally, the makeup of our principal risks
has not significantly changed from that published in the 2017
Annual Report. However, there have been changes in certain risk
trends and impact assessments as a result of the challenges in our
operating environment in Tanzania,
particularly as a result of ongoing disputes with the Government of
Tanzania, and developments or
trends affecting the wider global economy and/or the mining
industry. As a result of our mid-year assessment, we continue to
view our principal risks for the remainder of 2018 as relating to
the following:
- Political, legal and regulatory developments
- Single country risk
- Attraction and retention of employees
- Significant changes to commodity prices
- Operational security and theft
- Liquidity
- Significant fraud and corruption
- Reserve and resource estimates
- Environmental hazards and rehabilitation
- Safety risks relating to mining operations
Further details as regards our Principal Risks and Uncertainties
and risk assessments conducted in respect thereof are provided as
part of the 2017 Annual Report and Accounts.
Directors’
Responsibility Statement
The Directors confirm that, to the best of their knowledge, the
condensed consolidated interim financial information has been
prepared in accordance with IAS 34 as adopted by the European
Union. The half-year management report includes a fair review of
the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
- an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed consolidated interim financial information, and a
description of the principal risks and uncertainties for the
remaining six months of the financial year; and
- material related-party transactions in the first six months of
the financial year and any material changes in the related party
transactions described in the last Annual Report.
The Directors of Acacia Mining plc are listed in the Acacia
Mining plc Annual Report for 31 December
2017. A list of current Directors is maintained on the
Acacia Mining plc Group website: www.acaciamining.com.
On behalf of the Board
Peter Geleta, Interim Chief
Executive Officer
Kelvin Dushnisky, Chairman
Independent review report to Acacia
Mining plc
Report on the condensed consolidated
interim financial information
Our conclusion
We have reviewed Acacia Mining plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the interim results of Acacia Mining plc for the 6 month period
ended 30 June 2018. Based on our
review, nothing has come to our attention that causes us to believe
that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting
Standard 34, ‘Interim Financial Reporting’, as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom’s Financial Conduct Authority.
Emphasis of Matter – Impact of mineral
concentrate export ban
In forming our conclusion on the interim financial statements,
which is not modified, we have considered the adequacy of the
disclosures made in note 2 to the financial statements concerning
the impact of the mineral concentrate export ban and negotiations
with the Government of Tanzania on
the group’s and parent company’s assets, liabilities and cash
flows. In addition, these conditions, along with the other matters
explained in note 2 to the interim financial statements, indicate
the existence of a material uncertainty which may cast significant
doubt about the group’s and parent company’s ability to continue as
a going concern, should the assumptions on which the disclosures
are made in note 2 prove not to be correct. The interim financial
statements do not include the adjustments that would result if the
group and parent company were unable to continue as a going
concern.
What we have reviewed
The interim financial statements
comprise:
?the consolidated balance sheet as at
30 June 2018;
?the consolidated income statement and
consolidated statement of comprehensive income for the period then
ended;
?the consolidated statement of cash
flows for the period then ended;
?the consolidated statement of changes
in equity for the period then ended; and
?the explanatory notes to the interim
financial statements.
The interim financial statements
included in the interim results have been prepared in accordance
with International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim
financial statements and the review
Our responsibilities and those of the
directors
The interim results, including the
interim financial statements, is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim results in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom’s
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial
statements involves
We conducted our review in accordance
with International Standard on Review Engagements (UK and
Ireland) 2410, ‘Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity’ issued by the Auditing Practices Board for use in the
United Kingdom. A review of
interim financial statements consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures.
A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing (UK) and, consequently, does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information contained in the interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
19 July 2018
- The maintenance and integrity of the Acacia Mining plc website
is the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim financial statements since
they were initially presented on the website.
- Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
Condensed Financial Information
Consolidated income statement
|
|
For the six months ended 30 June |
For
the year ended 31 December |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
Notes |
2018 |
2017 |
2017 |
|
|
|
|
|
Revenue |
|
333,382 |
391,664 |
751,515 |
Cost
of sales |
|
(221,226) |
(243,967) |
(458,447) |
Gross profit |
|
112,156 |
147,697 |
293,068 |
Corporate administration |
|
(11,304) |
(12,520) |
(26,913) |
Share-based payments |
|
1,406 |
7,785 |
8,236 |
Exploration and evaluation costs |
|
(7,231) |
(16,150) |
(24,829) |
Corporate social responsibility expenses |
|
(3,083) |
(3,739) |
(8,213) |
Impairment charges |
6 |
(24,234) |
- |
(850,182) |
Other
charges |
7 |
(3,621) |
(19,617) |
(90,370) |
Profit/ (loss) before net finance expense and taxation |
|
64,089 |
103,456 |
(699,203) |
Finance income |
8 |
808 |
1,543 |
1,944 |
Finance expense |
8 |
(8,240) |
(5,454) |
(12,407) |
Profit/ (loss) before taxation |
|
56,657 |
99,545 |
(709,666) |
Tax
(expense)/credit |
9 |
(25,780) |
(37,002) |
2,272 |
|
|
|
|
|
Net
profit/ (loss) for the period |
|
30,877 |
62,543 |
(707,394) |
|
|
|
|
|
Earnings/ (loss) per share (cents): |
|
|
|
|
Basic
earnings/ (loss) per share (cents) |
10 |
7.5 |
15.3 |
(172.5) |
Diluted earnings/ (loss) per share (cents) |
10 |
7.5 |
15.2 |
(172.5) |
The notes on pages 37 to 55 are an integral part of this
financial information.
Consolidated statement of
comprehensive income
|
|
For the six months ended 30 June |
For
the year ended 31 December |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
|
2018 |
2017 |
2017 |
Net
profit/ (loss) for the period |
|
30,877 |
62,543 |
(707,394) |
Other comprehensive income: |
|
|
|
|
Items that may be subsequently reclassified to profit or
loss: |
|
|
|
|
Changes in fair value of cash flow hedges |
|
72 |
52 |
108 |
Total comprehensive income/ (loss) for the period |
|
30,949 |
62,595 |
(707,286) |
The notes on pages 37 to 55 are an integral part of this
financial information.
Consolidated balance sheet |
|
As
at
30 June (Unaudited) |
As
at
30 June (Unaudited) |
As
at
31 December (Audited) |
(US$’000) |
Notes |
2018 |
2017 |
2017 |
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill and intangible assets |
12 |
48,149 |
216,190 |
82,383 |
Property, plant and equipment |
13 |
774,353 |
1,465,309 |
770,574 |
Deferred tax assets |
|
171,838 |
3,208 |
169,513 |
Non-current portion of inventory |
15 |
129,318 |
115,775 |
133,550 |
Derivative financial instruments |
14 |
739 |
770 |
907 |
Other
non-current assets |
16 |
161,051 |
58,474 |
180,708 |
|
|
1,285,448 |
1,859,726 |
1,337,635 |
Current assets |
|
|
|
|
Inventories |
15 |
296,633 |
280,692 |
291,880 |
Trade
and other receivables |
|
16,890 |
12,039 |
18,085 |
Derivative financial instruments |
14 |
1,692 |
601 |
2,619 |
Other
current assets |
16 |
105,379 |
190,868 |
70,155 |
Cash
and cash equivalents |
|
120,089 |
175,886 |
80,513 |
|
|
540,683 |
660,086 |
463,252 |
Non-current assets classified as held for sale |
17 |
10,000 |
- |
- |
Total assets |
|
1,836,131 |
2,519,812 |
1,800,887 |
EQUITY AND LIABILITIES |
|
|
|
|
Share
capital and share premium |
|
929,199 |
929,199 |
929,199 |
Other
reserves |
|
222,742 |
961,912 |
191,793 |
Total
owners' equity |
|
1,151,941 |
1,891,111 |
1,120,992 |
Total equity |
|
1,151,941 |
1,891,111 |
1,120,992 |
Non-current liabilities |
|
|
|
|
Borrowings |
18 |
28,400 |
56,800 |
42,600 |
Deferred tax liabilities |
|
107,806 |
148,341 |
99,533 |
Derivative financial instruments |
14 |
- |
1,068 |
- |
Provisions |
|
124,461 |
147,314 |
127,028 |
Other
non-current liabilities |
|
4,113 |
4,778 |
5,038 |
|
|
264,780 |
358,301 |
274,199 |
Current liabilities |
|
|
|
|
Trade
and other payables |
|
370,797 |
228,942 |
350,450 |
Borrowings |
18 |
28,400 |
28,400 |
28,400 |
Derivative financial instruments |
14 |
380 |
1,114 |
481 |
Provisions |
|
19,213 |
9,336 |
24,650 |
Other
current liabilities |
|
620 |
2,608 |
1,715 |
|
|
419,410 |
270,400 |
405,696 |
Total liabilities |
|
684,190 |
628,701 |
679,895 |
Total equity and liabilities |
|
1,836,131 |
2,519,812 |
1,800,887 |
The notes on pages 37 to 55 are an integral part of this
financial information.
Consolidated statement of changes in
equity
|
Notes |
Share
capital |
Share
premium |
Other
distributable reserve |
Cash
flow hedging reserve |
Share
option reserve |
(US$’000) |
|
|
|
|
|
|
Balance at 31 December 2016 (Audited) |
|
62,097 |
867,102 |
1,368,713 |
559 |
3,953 |
Total
comprehensive income for the period |
|
- |
- |
- |
52 |
- |
Dividends to equity holders of the Company |
|
- |
- |
- |
- |
- |
Share
option grants |
|
- |
- |
- |
- |
6 |
Balance at 30 June 2017 (Unaudited) |
|
62,097 |
867,102 |
1,368,713 |
611 |
3,959 |
Total
comprehensive loss for the period |
|
- |
- |
- |
56 |
- |
Share
option grants |
|
- |
- |
- |
- |
(238) |
Dividends to equity holders of the Company |
|
- |
- |
- |
- |
- |
Balance at 31 December 2017 (Audited) |
|
62,097 |
867,102 |
1,368,713 |
667 |
3,721 |
Total
comprehensive income for the period |
|
- |
- |
- |
72 |
- |
Balance at 30 June 2018 (Unaudited) |
|
62,097 |
867,102 |
1,368,713 |
739 |
3,721 |
|
Notes |
Accumulated losses |
Total
owners' equity |
Total
non- controlling interests |
Total
equity |
(US$’000) |
|
|
|
|
|
Balance at 31 December 2016 (Audited) |
|
(439,529) |
1,862,895 |
- |
1,862,895 |
Total
comprehensive income for the period |
|
62,543 |
62,595 |
- |
62,595 |
Dividends to equity holders of the Company |
|
(34,385) |
(34,385) |
- |
(34,385) |
Share
option grants |
|
- |
6 |
- |
6 |
Balance at 30 June 2017 (Unaudited) |
|
(411,371) |
1,891,111 |
- |
1,891,111 |
Total
comprehensive loss for the period |
|
(769,937) |
(769,881) |
- |
(769,881) |
Share
option grants |
|
- |
(238) |
- |
(238) |
Dividends to equity holders of the Company |
|
- |
- |
- |
- |
Balance at 31 December 2017 (Audited) |
|
(1,181,308) |
1,120,992 |
- |
1,120,992 |
Total
comprehensive income for the period |
|
30,877 |
30,949 |
- |
30,949 |
Balance at 30 June 2018 (Unaudited) |
|
(1,150,431) |
1,151,941 |
- |
1,151,941 |
The notes on pages 37 to 55 are an integral part of this
financial information.
Consolidated statement of cash
flows
|
|
For the six months ended
30 June |
For
the year ended
31 December |
(US$’000) |
Notes |
(Unaudited)
2018 |
(Unaudited)
2017 |
(Audited)
2017 |
Cash flows from operating activities |
|
|
|
|
Net
profit/ (loss) profit for the period |
|
30,877 |
62,543 |
(707,394) |
Adjustments for: |
|
|
|
|
Tax expense/(credit) |
|
25,780 |
37,002 |
(2,272) |
Depreciation and amortisation |
|
43,594 |
69,722 |
125,968 |
Finance items |
|
7,432 |
3,911 |
10,463 |
Impairment charges |
|
24,234 |
- |
850,182 |
Gain from sale of mineral royalty |
|
(45,000) |
(1,753) |
(1,753) |
Loss on disposal of property, plant and equipment |
|
- |
- |
123 |
Cash
settlement of share options |
|
- |
- |
(259) |
Working capital adjustments |
19 |
(24,162) |
(159,697) |
(313,091) |
Other
non-cash items |
19 |
1,749 |
(8,209) |
22,160 |
Cash generated from/ (used in) operations before interest and
tax |
|
64,504 |
3,519 |
(15,873) |
Finance income |
|
808 |
1,543 |
1,944 |
Finance expenses |
|
(6,446) |
(3,747) |
(9,043) |
Net
cash generated by/ (used in) operating activities |
|
58,866 |
1,315 |
(22,972) |
|
|
|
|
|
Cash flows used in investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(51,741) |
(100,064) |
(157,408) |
Movement in other assets |
|
5,376 |
3,746 |
6,856 |
Proceeds from sale of mineral royalty |
|
45,000 |
1,753 |
1,753 |
Other
investing activities |
19 |
(3,146) |
(221) |
(2,912) |
Net
cash used in investing activities |
|
(4,511) |
(94,786) |
(151,711) |
|
|
|
|
|
Cash flows used in financing activities |
|
|
|
|
Loans
paid |
|
(14,200) |
(14,200) |
(28,400) |
Dividends paid |
|
- |
(34,385) |
(34,385) |
Net
cash used in financing activities |
|
(14,200) |
(48,585) |
(62,785) |
|
|
|
|
|
Net
increase/ (decrease) in cash and cash equivalents |
|
40,155 |
(142,056) |
(237,468) |
Net
foreign exchange difference |
|
(579) |
151 |
190 |
Cash
and cash equivalents at the beginning of the period |
|
80,513 |
317,791 |
317,791 |
Cash and cash
equivalents at the end of the period |
|
120,089 |
175,886 |
80,513 |
|
|
|
|
|
The notes on pages 37 to 55 are an integral part of this
financial information.
Notes to the condensed financial
information
1. General Information
Acacia Mining plc, formerly African Barrick Gold plc (the
“Company”, "Acacia” or collectively with its subsidiaries the
“Group”) was incorporated on 12 January
2010 and re-registered as a public limited company on
12 March 2010 under the Companies Act
2006. It is registered in England
and Wales with registered number
7123187.
On 24 March 2010 the Company’s
shares were admitted to the Official List of the United Kingdom
Listing Authority (“UKLA”) and to trading on the Main Market of the
London Stock Exchange, hereafter referred to as the Initial Public
Offering (“IPO”). The address of its registered office is No.1
Cavendish Place, London, W1G
0QF.
Barrick Gold Corporation (“Barrick”) currently owns
approximately 63.9% of the shares of the Company and is the
ultimate parent and controlling party of the Group. The
financial statements of Barrick can be obtained from
www.barrick.com.
The condensed consolidated interim financial information for the
six months ended 30 June 2018 was
approved for issue by the Board of Directors of the Company on
19 July 2018. Statutory accounts for
the year ended 31 December 2017 were
approved by the Board of Directors on 6
March 2018 and delivered to the Registrar of Companies. The
report of the auditors’ on those accounts was unqualified, but did
contain an emphasis of matter paragraph regarding the impact of the
mineral concentrate export ban and negotiation with the Government
of Tanzania, and did not contain
any statement under section 498 of the Companies Act 2006. The
condensed consolidated interim financial information has been
reviewed, not audited. The condensed consolidated interim financial
information does not comprise statutory accounts within the meaning
of section 434 of the Companies Act 2006.
The Group’s primary business is the mining, processing and sale
of gold. The Group has three operating mines located in
Tanzania. The Group also has a
portfolio of exploration projects located across Africa.
2. Basis of Preparation of the
condensed interim financial information
The condensed consolidated interim financial information for the
six months ended 30 June 2018 has
been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with IAS 34, ‘Interim
Financial Reporting’ as adopted by the European Union. The
condensed consolidated interim financial information should be read
in conjunction with the annual financial statements for the year
ended 31 December 2017, which have
been prepared in accordance with IFRS as adopted by the European
Union. The condensed consolidated interim financial information has
been prepared under the historical cost basis, as modified by the
revaluation of financial assets and financial liabilities
(including derivative instruments) at fair value through profit or
loss. The financial information is presented in US dollars (US$)
and all monetary results are rounded to the nearest thousand
(US$’000) except when otherwise indicated.
Acacia Group’s business activities, together with factors likely
to affect its future development, performance and position, are set
out in the operational and financial review sections of this
interim results release. The financial position of the Acacia
Group, its cash flows, liquidity position and borrowing facilities
are described in the operating and financial review sections of
this interim results release.
At 30 June 2018, the Group had
cash and cash equivalents of US$120
million with a further US$150
million available under the undrawn revolving credit
facility which remains in place until November 2019. Total borrowings at the end of the
period amounted to US$57 million, of
which US$28 million will be paid in
the next 12 months. Total indirect tax receivables at the end of
the period amounted to US$173
million, of which US$54
million is included in other current assets and are expected
to be received or recovered within 12 months. The refunds remain
dependent on processing and payments of refunds by the Government
of Tanzania. Furthermore, included
in working capital is finished gold contained in concentrate of
approximately 186,000 ounces, approximately 12.1 million pounds of
copper contained in concentrate and approximately 159,000 ounces of
silver contained in concentrate.
In assessing the Acacia Group’s going concern status the
Directors have taken into account the impact of the concentrate
export ban on on-going operations as well as the following factors
and assumptions: the current cash position; the latest mine plans,
the short-term gold price, and Acacia Group’s capital expenditure
and financing plans. In addition, the Directors have considered a
range of scenarios around the various potential outcomes for the
resolution of the current operating challenges in Tanzania in the circumstances, including the
cash flow impact of an extended concentrate export ban; and the
potential impacts of the timing and final terms of any
comprehensive settlement which might be approved by the Company
which reflect key terms of the framework announcements made by
Barrick and the GoT in October 2017,
including the lifting of the concentrate export ban and staged
payments of US$300 million relating
to historical tax matters. In addition, the Directors have assumed
that the Group will not be required to settle its current
outstanding borrowing obligations and will repay these in
accordance with the current terms of the relevant agreements. After
making appropriate enquiries and considering the uncertainties
described above, the Directors consider that it is appropriate to
adopt the going concern basis in preparing the condensed
consolidated interim financial information, however have concluded
that the combination of the above circumstances represents a
material uncertainty that may cast significant doubt on the Group’s
ability to continue as a going concern. The condensed consolidated
interim financial information does not include any adjustments that
would result if the Group was unable to continue as a going concern
should the assumptions referred to above prove not to be
correct.
The auditors have included an emphasis of matter within their
Independent review report on page 30, drawing attention to the
material uncertainties related to the impact of the concentrate
export ban and ongoing discussions between Barrick and the GoT on
the Group’s assets, liabilities and cash flows, and have included a
separate section within their Independent review report under the
heading “Emphasis of matter - Impact of mineral concentrate export
ban” detailing the matters outlined above.
3. Accounting Policies
The accounting policies adopted are consistent with those used
in the Acacia Mining plc annual financial statements for the year
ended 31 December 2017. As disclosed
in those annual financial statements, IFRS 9, “Financial
Instruments” and IFRS 15, “Revenue from contracts with customers”
were applicable for financial reporting periods starting
1 January 2018 and as a result have
been adopted by the Group, however the changes have not materially
affected the Group. There are no other new standards,
interpretations or amendments to standards issued and effective for
the period which materially impacted on the Group. The following
exchange rates to the US dollar have been applied:
|
As
at
30 June
2018 |
Average
six months ended
30 June
2018 |
As
at
30 June
2017 |
Average
six months ended
30 June
2017 |
As
at
31 December
2017 |
Average
year ended
31 December
2017 |
South
African rand (US$:ZAR) |
13.75 |
12.29 |
13.09 |
13.20 |
12.36 |
13.30 |
Tanzanian shilling (US$:TZS) |
2,266 |
2,252 |
2,230 |
2,224 |
2,230 |
2,229 |
Australian dollars (US$:AUD) |
1.35 |
1.30 |
1.30 |
1.33 |
1.28 |
1.30 |
UK
pound (US$:GBP) |
0.76 |
0.73 |
0.59 |
0.79 |
0.74 |
0.78 |
4. Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates. In preparing these
condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group’s
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 December
2017.
5. Segment Reporting
The Group has only one primary product produced in a single
geographic location, being gold produced in Tanzania. In addition the Group produces
copper and silver as a co-product. Reportable operating segments
are based on the internal reports provided to the Chief Operating
Decision Maker (“CODM”) to evaluate segment performance, decide how
to allocate resources and make other operating decisions. After
applying the aggregation criteria and quantitative thresholds
contained in IFRS 8, the Group’s reportable operating segments were
determined to be: North Mara gold mine; Bulyanhulu gold mine;
Buzwagi gold mine; a separate Corporate and Exploration segment,
which primarily consists of costs related to other charges and
corporate social responsibility expenses.
Segment results and carrying values include items directly
attributable to the segment as well as those that can be allocated
on a reasonable basis. Segment carrying values are disclosed and
calculated as shareholders equity after adding back debt and
intercompany liabilities, and subtracting cash and intercompany
assets. Capital expenditures comprise of additions to property,
plant and equipment. The Group has also included segment cash costs
and all-in sustaining cost per ounce sold.
Segment information for the reportable operating segments of the
Group for the periods ended 30 June
2018, 30 June 2017 and
31 December 2017 is set out
below.
|
For the six months ended 30 June 2018 |
(Unaudited)
(US$’000,except per ounce amounts) |
North
Mara |
Bulyanhulu |
Buzwagi |
Other |
Total |
|
Gold
revenue |
210,172 |
26,192 |
95,301 |
- |
331,665 |
|
Co-product revenue |
903 |
446 |
368 |
- |
1,717 |
|
Total segment revenue |
211,075 |
26,638 |
95,669 |
- |
333,382 |
|
Segment cash operating
cost1 |
(94,267) |
(13,286) |
(70,088) |
- |
(177,641) |
|
Realised gains on gold
hedges |
1,103 |
- |
559 |
- |
1,662 |
|
Corporate
administration |
(5,919) |
(852) |
(2,340) |
(2,193) |
(11,304) |
|
Share-based
payments |
194 |
414 |
212 |
586 |
1,406 |
|
Exploration and
evaluation costs |
- |
- |
- |
(7,231) |
(7,231) |
|
Other charges and
corporate social responsibility expenses |
(9,170) |
(18,617) |
(2,396) |
23,479 |
(6,704) |
|
EBITDA2 |
103,016 |
(5,703) |
21,616 |
14,641 |
133,570 |
|
Impairment
charges |
- |
- |
- |
(24,234) |
(24,234) |
|
Depreciation and
amortisation4 |
(25,548) |
(18,668) |
(731) |
(300) |
(45,247) |
|
EBIT2 |
77,468 |
(24,371) |
20,885 |
(9,893) |
64,089 |
|
Finance income |
|
|
|
|
808 |
|
Finance expense |
|
|
|
|
(8,240) |
|
Profit before taxation |
|
|
|
|
56,657 |
|
Tax expense |
|
|
|
|
(25,780) |
|
Net
profit for the period |
|
|
|
|
30,877 |
|
Capital expenditure: |
|
|
|
|
|
|
Sustaining |
13,552 |
2,109 |
2,181 |
180 |
18,022 |
|
Expansionary |
3,668 |
1,534 |
- |
- |
5,202 |
|
Capitalised development |
27,932 |
- |
- |
- |
27,932 |
|
|
45,152 |
3,643 |
2,181 |
180 |
51,156 |
|
Non-cash capital expenditure adjustments |
|
|
|
|
|
|
Reclamation asset adjustment |
(1,165) |
(1,746) |
372 |
- |
(2,539) |
|
Other
non-cash capital expenditure |
- |
- |
- |
(1,244) |
(1,244) |
|
Total capital expenditure |
43,987 |
1,897 |
2,553 |
(1,064) |
47,373 |
|
|
|
|
|
|
|
|
Segmental cash operating cost |
94,267 |
13,286 |
70,088 |
|
177,641 |
|
Deduct: co-product revenue |
(903) |
(446) |
(368) |
|
(1,717) |
|
Total
cash costs |
93,364 |
12,840 |
69,720 |
|
175,924 |
|
Sold
ounces |
158,870 |
19,870 |
72,305 |
|
251,045 |
|
Cash cost per ounce
sold2 |
588 |
646 |
964 |
|
701 |
|
Corporate administration charges |
37 |
43 |
32 |
|
45 |
|
Share-based payments |
(1) |
(21) |
(3) |
|
(6) |
|
Rehabilitation - accretion and depreciation |
8 |
28 |
6 |
|
9 |
|
Corporate social responsibility expenses |
10 |
25 |
8 |
|
13 |
|
Capitalised stripping/ UG development |
176 |
13 |
- |
|
112 |
|
Sustaining capital expenditure |
85 |
93 |
30 |
|
71 |
|
All-in sustaining
cost per ounce sold2 |
903 |
827 |
1,037 |
|
945 |
|
Segment carrying
value3 |
270,535 |
592,245 |
189,060 |
52,241 |
1,104,081 |
|
|
|
|
|
|
|
|
|
For the six months ended 30 June 2017 |
(Unaudited)
(US$’000,except per ounce amounts) |
North
Mara |
Bulyanhulu |
Buzwagi |
Other |
Total |
|
Gold
revenue |
220,217 |
100,023 |
65,619 |
- |
385,859 |
|
Co-product revenue |
653 |
2,760 |
2,392 |
- |
5,805 |
|
Total segment revenue |
220,870 |
102,783 |
68,011 |
- |
391,664 |
|
Segment cash operating
cost1 |
(79,251) |
(67,344) |
(39,413) |
0 |
(186,008) |
|
Corporate
administration |
(4,181) |
(2,937) |
(2,559) |
(2,843) |
(12,520) |
|
Share-based
payments |
361 |
340 |
309 |
6,775 |
7,785 |
|
Exploration and
evaluation costs |
- |
- |
- |
(16,150) |
(16,150) |
|
Other charges and
corporate social responsibility expenses |
(4,204) |
(1,242) |
(6,408) |
(11,502) |
(23,356) |
|
EBITDA2 |
133,595 |
31,600 |
19,940 |
(23,720) |
161,415 |
|
Depreciation and
amortisation4 |
(29,009) |
(26,940) |
(1,777) |
(233) |
(57,959) |
|
EBIT2 |
104,586 |
4,660 |
18,163 |
(23,953) |
103,456 |
|
Finance income |
|
|
|
|
1,543 |
|
Finance expense |
|
|
|
|
(5,454) |
|
Profit before taxation |
|
|
|
|
99,545 |
|
Tax expense |
|
|
|
|
(37,002) |
|
Net
profit for the period |
|
|
|
|
62,543 |
|
Capital expenditure: |
|
|
|
|
|
|
Sustaining |
10,930 |
8,599 |
865 |
957 |
21,351 |
|
Expansionary |
4,489 |
982 |
- |
51 |
5,522 |
|
Capitalised development |
33,282 |
31,054 |
- |
- |
64,336 |
|
|
48,701 |
40,635 |
865 |
1,008 |
91,209 |
|
Non-cash capital expenditure adjustments |
|
|
|
|
|
|
Reclamation asset adjustment |
(56) |
191 |
(1) |
- |
134 |
|
Other
non-cash capital expenditure |
- |
- |
- |
(1) |
(1) |
|
Total capital expenditure |
48,645 |
40,826 |
864 |
1,007 |
91,342 |
|
Segmental cash operating cost |
79,251 |
67,344 |
39,413 |
- |
186,008 |
|
Deduct: co-product revenue |
(653) |
(2,760) |
(2,392) |
- |
(5,805) |
|
Total
cash costs |
78,597 |
64,584 |
37,021 |
- |
180,203 |
|
Sold
ounces |
178,130 |
81,214 |
53,094 |
- |
312,438 |
|
Cash cost per ounce
sold2 |
441 |
795 |
697 |
|
577 |
|
Corporate administration charges |
23 |
36 |
48 |
|
40 |
|
Share-based payments |
(2) |
(4) |
(6) |
|
(25) |
|
Rehabilitation - accretion and depreciation |
10 |
16 |
7 |
|
11 |
|
Corporate social responsibility expenses |
8 |
8 |
7 |
|
12 |
|
Capitalised stripping/ UG development |
187 |
382 |
- |
|
206 |
|
Sustaining capital expenditure |
69 |
107 |
17 |
|
72 |
|
All-in sustaining
cost per ounce sold2 |
736 |
1,340 |
770 |
|
893 |
|
Segment carrying
value3 |
294,744 |
1,281,208 |
142,280 |
97,233 |
1,815,465 |
|
|
For the year ended 31 December 2017 |
(Audited)
(US$’000,except per ounce amounts) |
North
Mara |
Bulyanhulu |
Buzwagi |
Other |
Total |
|
Gold
revenue |
406,917 |
134,110 |
203,267 |
- |
744,294 |
|
Co-product revenue |
1,296 |
2,937 |
2,988 |
- |
7,221 |
|
Total segment revenue |
408,213 |
137,047 |
206,255 |
- |
751,515 |
|
Segment cash operating
cost1 |
(163,001) |
(93,521) |
(98,417) |
- |
(354,939) |
|
Realised gains on gold
hedges |
1,294 |
- |
1,399 |
- |
2,693 |
|
Corporate
administration |
(8,313) |
(6,314) |
(5,694) |
(6,592) |
(26,913) |
|
Share-based
payments |
511 |
593 |
349 |
6,783 |
8,236 |
|
Exploration and
evaluation costs |
- |
(571) |
- |
(24,258) |
(24,829) |
|
Other charges and
corporate social responsibility expenses |
(13,243) |
(52,916) |
(13,605) |
(18,819) |
(98,583) |
|
EBITDA2 |
225,461 |
(15,682) |
90,287 |
(42,886) |
257,180 |
|
Impairment
charges |
- |
(837,921) |
- |
(12,261) |
(850,182) |
|
Depreciation and
amortisation4 |
(54,826) |
(46,531) |
(4,288) |
(556) |
(106,201) |
|
EBIT2 |
170,635 |
(900,134) |
85,999 |
(55,703) |
(699,203) |
|
Finance income |
|
|
|
|
1,944 |
|
Finance expense |
|
|
|
|
(12,407) |
|
Loss before taxation |
|
|
|
|
(709,666) |
|
Tax expense |
|
|
|
|
2,272 |
|
Net
profit for the year |
|
|
|
|
(707,394) |
|
|
|
|
|
|
|
|
Capital expenditure: |
|
|
|
|
|
|
Sustaining |
20,927 |
9,033 |
4,338 |
1,259 |
35,557 |
|
Expansionary |
10,270 |
1,190 |
- |
113 |
11,573 |
|
Capitalised development |
61,066 |
39,543 |
- |
- |
100,609 |
|
|
92,263 |
49,766 |
4,338 |
1,372 |
147,739 |
|
Non-cash capital expenditure adjustments |
|
|
|
|
|
|
Reclamation asset adjustment |
(2,951) |
(4,158) |
(1,978) |
- |
(9,087) |
|
Total capital expenditure |
89,312 |
45,608 |
2,360 |
1,372 |
138,652 |
|
|
|
|
|
|
|
|
Segmental cash operating cost |
163,001 |
93,521 |
98,417 |
|
354,939 |
|
Deduct: co-product revenue |
(1,296) |
(2,937) |
(2,988) |
|
(7,221) |
|
Total
cash costs |
161,705 |
90,584 |
95,429 |
|
347,718 |
|
Sold
ounces |
324,455 |
107,855 |
160,552 |
|
592,861 |
|
Cash cost per ounce
sold2 |
498 |
840 |
594 |
|
587 |
|
Corporate administration charges |
26 |
59 |
35 |
|
45 |
|
Share-based payments |
(2) |
(6) |
(2) |
|
(14) |
|
Rehabilitation - accretion and depreciation |
11 |
20 |
5 |
|
11 |
|
Corporate social responsibility expenses |
11 |
10 |
8 |
|
14 |
|
Capitalised stripping/ UG development |
188 |
367 |
- |
|
170 |
|
Sustaining capital expenditure |
71 |
83 |
27 |
|
62 |
|
All-in sustaining
cost per ounce sold2 |
803 |
1,373 |
667 |
|
875 |
|
Segment carrying
value3 |
249,170 |
600,359 |
194,385 |
82,864 |
1,126,778 |
|
1 The CODM reviews cash operating costs for the
three operating mine sites separately from corporate administration
costs and exploration costs. Consequently, the Group has reported
these costs in this manner.
2 These are
non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to ‘Non IFRS measures’ on page 24 for
definitions.
3 Segment carrying values
are calculated as shareholders equity after adding back debt and
intercompany liabilities, and subtracting cash and intercompany
assets and include outside shareholders’ interests.
4 Depreciation and
amortisation includes the depreciation component of the cost of
inventory sold.
6. Impairment Assessment
In accordance with IAS 36 “Impairment
of assets” and IAS 38 “Intangible Assets” a review for impairment
of goodwill is undertaken annually, or at any time an indicator of
impairment is considered to exist, and in accordance with IAS 16
“Property, plant and equipment” a review for impairment of
long-lived assets is undertaken at any time an indicator of
impairment is considered to exist.
At the end of the reporting period,
there remained a number of potential triggers for impairment
testing, including the on-going uncertainty surrounding a potential
resolution of the Company’s disputes with the Government of
Tanzania and the fact that the
Company’s market capitalisation has been lower than its carrying
value for a prolonged period of time.
As a result, the Group has undertaken
a carrying value assessment of its affected cash generating units
(“CGUs”) and long life intangible assets. The assessment compared
the recoverable amount of CGU to the carrying value of the CGUs.
The recoverable amount of an asset is assessed by reference to the
higher of value in use (“VIU”), being the net present value (“NPV”)
of future cash flows expected to be generated by the asset, and
fair value less costs to dispose (“FVLCD”). The FVLCD of a CGU is
based on an estimate of the amount that the Group may obtain in a
sale transaction on an arm’s length basis. There is no active
market for the Group’s CGUs. Consequently, FVLCD is derived using
discounted cash flow techniques (NPV of expected future cash flows
of a CGU), which incorporate market participant assumptions. Cost
to dispose is based on management’s best estimates of future
selling costs at the time of calculating FVLCD. Costs attributable
to the disposal of a CGU are not considered significant.
For the purpose of carrying value
assessments in accordance with applicable accounting standards,
Management has based its calculation of future cash flows of the
affected CGUs by reference to key terms of the Framework
announcements by Barrick and by the GoT in October 2017. Based on Barrick’s announcements
and its discussions and exchanges with Acacia, it is Barrick’s
belief that it will be able to agree with the GoT a detailed
proposal for a comprehensive settlement of the situation, and that
this will be in a form that Barrick could recommend to Acacia for
review. Key assumptions applied in these calculations include a 50%
economic share of future economic benefits for the GoT in the form
of taxes, royalties and a 16% free carry interest in the CGUs, as
well as a US$300 million payment in
relation to historical tax claims paid in instalments as
concentrate sales recommence. In addition the Framework
announcements provided for Acacia to contribute certain monies to
fund specific projects in Tanzania. With no updated information from
Barrick, Management had to make a best estimate of what can
reasonably be assumed for timing of conclusion of discussions
between Barrick and the GoT and an agreement of a proposal to be
put to the Company for review, with consequent timing for the
commencement of concentrate sales and a potential Bulyanhulu
start-up. Management considers that it is reasonable for review
purposes to assume a six month prolongation (to the end of 2018) to
the discussions between Barrick and the GoT, and that in these
circumstances there would be a further three to four months delay
thereafter for the resumption of concentrate sales and exports,
with concentrate revenues commencing in Q2 2019. The start-up of
Bulyanhulu production in late 2019 would be unaffected by a further
six month delay in the discussions, VAT refunds are assumed to
recommence and historic carried forward tax losses are assumed to
continue to be available to offset against future taxable
profits.
Acacia has been providing support to
Barrick to seek to ensure that they can have informed discussions
with the GoT, but has not received for review a detailed proposal
that has been agreed between Barrick and the GoT, and therefore no
conclusions can be made by Acacia as to whether any particular
terms of settlement would be approved by Acacia. In the meantime,
Acacia continues to reserve its rights included under our mine
development agreements, the disputes between Acacia and the GoT
have not yet been resolved, and PML and BGML remain in
international arbitration with the GoT. Acacia continues to prefer
a negotiated resolution, but believes that there remain a range of
potential outcomes to the current situation.
Acacia considers that, in conducting
the review of carrying values in accordance with applicable
accounting standards as at 30 June
2018, the discount rate used in the 31 December 2017 calculation remains appropriate
to (a) reflect the uncertainty around the final terms of any
comprehensive settlement that might be agreed or whether settlement
will be reached at all, and (b) to best reflect the potential
reduction in value as a result of the proposed 16% free carry
interest for the GoT which cannot otherwise be included in
calculations of value at a CGU level conducted on a 100% basis.
Therefore, for the purposes of the carrying value review of the
affected CGUs, we have kept a discount rate of 11% compared to
Acacia’s updated calculated weighted average cost of capital of
6.5%.
The key economic assumptions used in
the reviews during 2018 and 2017 were:
|
For
the 6 months ended
30 June |
For
the year ended
31 December |
|
2018 |
2017 |
Gold
price per ounce |
US$1,200 |
US$1,200 |
Copper
price per pound |
US$2.75 |
US$2.75 |
British Pound (US$:GBP) |
0.76 |
0.76 |
Tanzanian Shilling (US$:TZS) |
2,250 |
2,250 |
Long-term oil price per barrel |
US$60 |
US$60 |
WACC |
6.5% |
6.5% |
Discount rate used in carrying value review |
11% |
11% |
NPV
multiples |
1 |
1 |
Using the latest information received
and updated with the latest understanding of the framework
agreement between the parties, the carrying values of all our
assets are still below the Company’s view of its recoverable
values.
After the reporting period, OreCorp,
Acacia’s JV partner in the Nyanzaga Project in Tanzania, executed its option under the
earn-in agreement to increase its stake to 51% in the project
through the payment of US$3.0 million
to Acacia. Further to that, Acacia has signed a conditional
agreement to sell its remaining 49% stake to OreCorp for
US$7.0 million and a net smelter
royalty capped at US$15 million based
on future production. In line with the applicable accounting
standard and driven by the uncertainty surrounding the current
environment, management did not recognise an asset for the right to
the royalty. As a result of the agreement, Acacia expects to
recover the value of the asset through sale and not through value
in use and as such has valued the asset at fair value less costs to
sell of US$10.0 million and recorded
an impairment charge of US$24.2
million and reclassified the intangible asset to non-current
assets held for sale on the balance sheet.
The carrying value for the Group is
now approximately US$1.1 billion,
made up of US$0.6 billion for
Bulyanhulu, US$0.3 billion for North
Mara and US$0.2 billion for
Buzwagi.
The impairment charges recognised in
the income statement for the periods ended 30 June 2018 and 31
December 2017 comprise the following:
|
For
the six months ended
30 June |
For
the year ended
31 December |
(in thousands of United States dollars) |
2018 |
2017 |
Bulyanhulu |
- |
837,921 |
Nyanzaga exploration property1 |
24,234 |
12,261 |
Gross
impairment charge |
24,234 |
850,182 |
Comprising: |
|
|
Impairment of goodwill |
- |
121,546 |
Impairment of property, plant and equipment |
- |
686,375 |
Impairment of supplies inventory |
- |
30,000 |
Impairment of intangible assets |
24,234 |
12,261 |
Gross
impairment charge, before tax |
24,234 |
850,182 |
Deferred income tax |
- |
(205,912) |
Total
impairment charge |
24,234 |
644,270 |
1 The Nyanzaga exploration
property is located in Tanzania.
Acquired mineral interests /exploration and evaluation assets are
classified as intangible assets and have indefinite useful
lives.
Management’s view is that the
recoverable values are most sensitive to changes in the assumptions
around gold prices, discount rates and the timing of the resolution
of the export ban. As a result, sensitivity calculations were
performed for these for Bulyanhulu. The sensitivity analysis is
based on a decrease in the long-term gold price of US$100 per ounce, and an increase in the discount
rate of 1%, and a delay of resolution by 6 months.
Under these scenarios, a reasonably
possible decrease in the gold price assumption of US$100 per ounce would result in an impairment
charge, net of tax, at Bulyanhulu of approximately US$98 million.
A reasonably possible increase in
discount rate of 1% would not result in any additional impairment
charges.
A further delay of six months in the
resolution of the export ban will also not result in any additional
impairment charges.
Should a negotiated resolution of the
current situation not eventuate, the recoverable values of the
identified CGUs may be further impacted, and these will be reviewed
at such time.
7. Other Charges
|
For the six months ended 30 June |
For
the year ended
31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Other expenses |
|
|
|
Restructuring costs |
844 |
3,304 |
25,077 |
Discounting of indirect tax receivables |
- |
- |
13,276 |
Bulyanhulu reduced operations costs |
16,636 |
- |
24,804 |
Foreign exchange losses |
4,683 |
4,583 |
2,710 |
Disallowed indirect taxes |
2,085 |
615 |
- |
Unrealised non-hedge derivative losses |
1,150 |
2,431 |
- |
Legal costs |
15,931 |
4,601 |
14,421 |
Once off legal settlements |
3,030 |
1,500 |
5,083 |
Project development costs |
- |
- |
1,485 |
Government levies and charges |
- |
535 |
- |
Inventory write-downs |
- |
- |
1,500 |
Other |
4,262 |
3,801 |
5,573 |
Total |
48,621 |
21,370 |
93,929 |
|
|
|
|
Other income |
|
|
|
Unrealised non-hedge derivative gains |
- |
- |
(200) |
Sale of mineral royalty |
(45,000) |
(1,753) |
- |
Other |
- |
- |
(3,359) |
Total |
(45,000) |
(1,753) |
(3,559) |
|
|
|
|
Total other charges |
3,621 |
19,617 |
90,370 |
8. Finance Income and Expenses
a) Finance income
|
For the six months ended 30 June |
For
the year ended
31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Interest on time deposits |
794 |
1,443 |
1,841 |
Other |
14 |
100 |
103 |
Total |
808 |
1,543 |
1,944 |
b) Finance expense
|
For the six months ended 30 June |
For
the year ended
31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Unwinding of discount1 |
1,794 |
1,708 |
3,364 |
Revolving credit facility charges2 |
1,154 |
1,151 |
2,341 |
Interest on CIL facility |
1,061 |
1,573 |
2,911 |
Premium on gold put options |
3,042 |
- |
2,113 |
Interest on finance leases |
- |
200 |
204 |
Bank
charges |
676 |
319 |
583 |
Other |
513 |
503 |
891 |
Total |
8,240 |
5,454 |
12,407 |
- The unwinding of discount is calculated on the
environmental rehabilitation provision.
- Included in credit facility charges are the amortisation
of the fees related to the revolving credit facility as well as the
monthly interest and facility fees.
9. Tax Expense
|
For the six months ended 30 June |
For
the year ended
31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Current tax: |
|
|
|
Current tax on profits for the period |
16,712 |
31,793 |
35,667 |
Adjustments in respect of prior years1 |
3,120 |
- |
172,000 |
Total current tax |
19,832 |
31,793 |
207,667 |
Deferred tax: |
|
|
|
Origination and reversal of temporary differences |
5,948 |
5,209 |
(209,939) |
Total deferred tax |
5,948 |
5,209 |
(209,939) |
Income tax expense |
25,780 |
37,002 |
(2,272) |
1 The prior year charge included in 2018 relates to 2017
final tax adjustments at North Mara. Included in 2017 is a
provision for uncertain tax positions of US$68.5 million relating to North Mara and
US$103.5 million relating to
Bulyanhulu, for uncertain tax positions, based on an estimate of
the impact of a comprehensive settlement reflecting the key terms
of the framework announcements made by Barrick and the GoT in
October 2017.
Income tax expense is recognised based on management’s estimate
of the weighted average effective annual income tax rate expected
for the full financial year. The estimated average annual tax rate
used for the year to 30 June 2018 is
46%, compared to 37% for the six months ended 30 June 2017.
The tax on the Group’s profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to the profits of the consolidated entities as
follows:
|
For the six months ended 30 June |
For
the year ended 31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Profit/(loss) before tax |
56,657 |
99,545 |
(709,666) |
Tax calculated at
domestic tax rates applicable to profits in the respective
countries |
18,600 |
30,519 |
(209,074) |
Tax
effects of: |
|
|
|
Expenses not deductible for tax purposes2 |
4,605 |
57 |
49,142 |
Tax losses for which
no deferred income tax asset was recognised |
1,616 |
6,426 |
9,611 |
Utilisation of previously recognised tax losses |
- |
- |
(25,594) |
Increase in provision for uncertain tax positions3 |
- |
- |
172,000 |
Recognition of previously unrecognised deferred tax asset |
(3,154) |
- |
- |
Prior
year adjustments |
3,120 |
- |
- |
Other
permanent differences |
993 |
- |
1,643 |
Tax
charge |
25,780 |
37,002 |
(2,272) |
2 Relates mainly to impairment charges relating to
goodwill, intangibles and supplies inventory not deductible for tax
purposes.
3 Included in 2017 is a provision for uncertain tax
positions of US$68.5 million relating
to North Mara and US$103.5 million
relating to Bulyanhulu, based on an estimate of the impact of a
comprehensive settlement reflecting the key terms of the framework
announcements made by Barrick and the GoT in October 2017.
In December 2017, Acacia raised an
additional tax provision of US$172
million relating to the estimated uncertain tax positions
for its operating companies. Acacia based its calculation on an
estimate of the impact of a comprehensive settlement reflecting the
key terms of the framework announcements made by Barrick and the
GoT in October 2017, including in
respect of historical tax claims. This brought total provisions for
Acacia’s uncertain tax positions to US$300
million. Acacia continues to reserve and protect all its
legal rights, as noted above and including through the arbitrations
commenced by BGML and PML, and no liability has been incurred by
Acacia as a result of the framework announcements. The additional
provision was required, however, to meet applicable accounting
standards requiring assessment of current obligations for
accounting purposes based on an assessment of relevant cash
outflows from the relevant operating companies in respect of
uncertain tax positions.
Tax periods remain open to review by the Tanzanian Revenue
Authority (TRA) in respect of income taxes for five years following
the date of the filing of the corporate tax return, during which
time the authorities have the right to raise additional tax
assessments including penalties and interest. Under certain
circumstances the reviews may cover longer periods. Because a
number of tax periods remain open to review by tax authorities,
there is a risk that transactions that have not been challenged in
the past by the authorities may be challenged by them in the
future, and this may result in the raising of additional tax
assessments plus penalties and interest.
10. Earnings/ (loss) Per Share
(EPS)
Basic EPS is calculated by dividing the net profit/ (loss) for
the period attributable to owners of the Company by the weighted
average number of Ordinary Shares in issue during the period.
Diluted earnings/ (loss) per share is calculated by adjusting
the weighted average number of Ordinary Shares outstanding to
assume conversion of all dilutive potential Ordinary Shares. The
Company has dilutive potential Ordinary Shares in the form of stock
options. The weighted average number of shares is adjusted for the
number of shares granted assuming the exercise of stock
options.
At 30 June 2018, 30 June 2017 and 31
December 2017, earnings/ (loss) per share have been
calculated as follows:
|
For the six months ended
30 June |
For the year ended
31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
(US$’000) |
2018 |
2017 |
2017 |
|
Earnings/ (loss) |
|
|
|
Net
profit/ (loss) attributable to owners of the parent |
30,877 |
62,543 |
(707,394) |
|
|
|
|
Weighted average number of Ordinary Shares in
issue |
410,085,499 |
410,085,499 |
410,085,499 |
Adjusted for dilutive effect of stock options |
- |
382,474 |
- |
Weighted
average number of Ordinary Shares for diluted earnings per
share |
410,085,499 |
410,467,973 |
410,085,499 |
|
|
|
|
Earnings/ (loss) per share |
|
|
|
Basic earnings/ (loss) per share (cents) |
7.5 |
15.3 |
(172.5) |
Dilutive earnings/(loss) per share (cents) |
7.5 |
15.2 |
(172.5) |
|
|
|
|
|
|
|
|
11. Dividends
Acacia has a cash flow based dividend policy where we aim to pay
a dividend of between 15-30% of our operational cash flow after
sustaining capital and capitalised development but before expansion
capital and financing costs. As a result of the inability to export
concentrates, Acacia experienced negative free cash flow in 2017
and therefore the Company did not pay a final 2017 dividend.
Although the Company has generated limited free cash flow for 2018,
the uncertainty in the Tanzanian operating environment and Group
liquidity requirements has resulted in the Directors opting not to
declare an interim dividend in 2018.
12. Goodwill and Intangible
Assets
For the six months
ended 30 June 2018
(in thousands of United States dollars) |
Goodwill |
Acquired exploration and evaluation
properties1 |
Total |
At 1
January, net of accumulated impairment |
6,352 |
76,031 |
82,383 |
Impairment2 |
- |
(24,234) |
(24,234) |
Reclassified as non-current asset held for sale3 |
- |
(10,000) |
(10,000) |
At
30 June 2018 |
6,352 |
41,797 |
48,149 |
|
|
|
|
At
30 June 2018 |
|
|
|
Cost |
401 250 |
102,842 |
504,092 |
Accumulated impairment |
(394,898) |
(61,045) |
(455,943) |
Net
carrying amount |
6,352 |
41,797 |
48,149 |
For the six months
ended 30 June 2017
(in thousands of United States dollars) |
Goodwill |
Acquired exploration and evaluation
properties1 |
Total |
At 1
January, net of accumulated impairment |
127,898 |
88,292 |
216,190 |
At
30 June 2017 |
127,898 |
88,292 |
216,190 |
|
|
|
|
At
30 June 2017 |
|
|
|
Cost |
401,250 |
112,842 |
514,092 |
Accumulated impairment |
(273,352) |
(24,550) |
(297,902) |
Net
carrying amount |
127,898 |
88,292 |
216,190 |
For the year ended
31 December 2017
(in thousands of United States dollars) |
Goodwill |
Acquired exploration and evaluation
properties1 |
Total |
At 1
January, net of accumulated impairment |
127,898 |
88,292 |
216,190 |
Impairment |
(121,546) |
(12,261) |
(133,807) |
At
31 December 2017 |
6,352 |
76,031 |
82,383 |
|
|
|
|
At
31 December 2017 |
|
|
|
Cost |
401,250 |
112,842 |
514,092 |
Accumulated impairment |
(394,898) |
(36,811) |
(431,709) |
Net
carrying amount |
6,352 |
76,031 |
82,383 |
1 Exploration and evaluation assets classified as
intangible assets have indefinite useful lives.
2 Impairments recognised in 2018 relate to the Nyanzaga
exploration property located in Tanzania (US$24.2
million). Refer to note 6 for further details.
3 Intangible assets related to the Nyanzaga exploration
property have been reclassified as non-current asset for sale as a
result of Management’s intention to sell the property.
13. Property, Plant and Equipment
For the six months
ended 30 June 2018 (Unaudited)
(US$’000) |
Plant
and equipment |
Mineral properties and mine development costs |
Assets
under construction¹ |
Total |
At 1 January 2018, net
of accumulated depreciation and impairment |
245,568 |
486,059 |
38,947 |
770,574 |
Additions |
- |
- |
51,156 |
51,156 |
Non-cash reclamation asset adjustments |
(2,539) |
- |
- |
(2,539) |
Foreign currency translation adjustments |
(1,244) |
- |
- |
(1,244) |
Depreciation |
(25,145) |
(18,449) |
- |
(43,594) |
Transfers between categories |
15,094 |
34,823 |
(49,917) |
- |
At
30 June 2018 |
231,734 |
502,433 |
40,186 |
774,353 |
|
|
|
|
|
At 1
January 2018 |
|
|
|
|
Cost |
1,943,643 |
1,887,068 |
38,947 |
3,869,658 |
Accumulated depreciation and impairment |
(1,698,075) |
(1,401,009) |
- |
(3,099,084) |
Net
carrying amount |
245,568 |
486,059 |
38,947 |
770,574 |
|
|
|
|
|
At 30
June 2018 |
|
|
|
|
Cost |
1,954,954 |
1,921,891 |
40,186 |
3,917,031 |
Accumulated depreciation and impairment |
(1,723,220) |
(1,419,458) |
- |
(3,142,678) |
Net
carrying amount |
231,734 |
502,433 |
40,186 |
774,353 |
For the six months
ended 30 June 2017 (Unaudited)
(US$’000) |
Plant
and equipment |
Mineral properties and mine development costs |
Assets
under construction¹ |
Total |
At 1 January 2017, net
of accumulated depreciation and impairment |
553,993 |
842,019 |
47,164 |
1,443,176 |
Additions |
- |
- |
91,209 |
91,209 |
Non-cash reclamation asset adjustments |
- |
- |
134 |
134 |
Foreign currency translation adjustments |
512 |
- |
- |
512 |
Disposals/write-downs |
- |
- |
- |
- |
Depreciation |
(37,854) |
(31,868) |
- |
(69,722) |
Transfers between categories |
21,373 |
74,511 |
(95,884) |
- |
At
30 June 2017 |
538,024 |
884,662 |
42,623 |
1,465,309 |
|
|
|
|
|
At 1
January 2017 |
|
|
|
|
Cost |
1,914,522 |
1,777,277 |
47,164 |
3,738,963 |
Accumulated depreciation and impairment |
(1,360,529) |
(935,258) |
- |
(2,295,787) |
Net
carrying amount |
553,993 |
842,019 |
47,164 |
1,443,176 |
|
|
|
|
|
At 30
June 2017 |
|
|
|
|
Cost |
1,936,407 |
1,851,788 |
42,623 |
3,830,818 |
Accumulated depreciation and impairment |
(1,398,383) |
(967,126) |
- |
(2,365,509) |
Net
carrying amount |
538,024 |
884,662 |
42,623 |
1,465,309 |
For
the year ended 31 December 2017
(Audited)
(US$’000) |
Plant
and equipment |
Mineral properties and mine development costs |
Assets
under construction¹ |
Total |
At 1 January 2017, net
of accumulated depreciation and impairment |
553,993 |
842,019 |
47,164 |
1,443,176 |
Additions |
- |
- |
147,739 |
147,739 |
Non-cash reclamation asset adjustments |
(9,087) |
- |
- |
(9,087) |
Foreign currency translation adjustments |
1,212 |
- |
- |
1,212 |
Disposals/write-downs |
(123) |
- |
- |
(123) |
Impairment2 |
(274,608) |
(411,767) |
- |
(686,375) |
Depreciation |
(71,984) |
(53,984) |
- |
(125,968) |
Transfers between categories |
46,165 |
109,791 |
(155,956) |
- |
At
31 December 2017 |
245,568 |
486,059 |
38,947 |
770,574 |
|
|
|
|
|
At 1
January 2017 |
|
|
|
|
Cost |
1,914,522 |
1,777,277 |
47,164 |
3,738,963 |
Accumulated depreciation and impairment |
(1,360,529) |
(935,258) |
- |
(2,295,787) |
Net
carrying amount |
553,993 |
842,019 |
47,164 |
1,443,176 |
|
|
|
|
|
At 31
December 2017 |
|
|
|
|
Cost |
1,943,643 |
1,887,068 |
38,947 |
3,869,658 |
Accumulated depreciation and impairment |
(1,698,075) |
(1,401,009) |
- |
(3,099,084) |
Net
carrying amount |
245,568 |
486,059 |
38,947 |
770,574 |
1 Assets under construction represents (a) sustaining
capital expenditures incurred constructing property, plant and
equipment related to operating mines and advance deposits made
towards the purchase of property, plant and equipment; and (b)
expansionary expenditure allocated to a project on a business
combination or asset acquisition, and the subsequent costs incurred
to develop the mine. Once these assets are ready for their intended
use, the balance is transferred to plant and equipment and/or
mineral properties and mine development costs.
2 The impairment in 2017 relates to property, plant and
equipment at Bulyanhulu.
Leases
Property, plant and equipment includes assets relating to the
design and construction costs of power transmission lines and
related infrastructure. At completion, ownership was transferred to
TANESCO in exchange for amortised repayment in the form of reduced
electricity supply charges. No future lease payment obligations are
payable under these finance leases.
Property, plant and equipment also includes five drill rigs
purchased under short-term finance leases.
The following amounts were included in property, plant and
equipment where the Group is a lessee under a finance lease:
|
|
For the six months ended
30 June |
For
the year ended
31 December |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Cost - capitalised finance leases |
|
51,618 |
51,618 |
51,618 |
Accumulated depreciation and impairment |
|
(43,603) |
(42,050) |
(42,948) |
Net carrying amount |
|
8,015 |
9,568 |
8,670 |
14. Derivative Financial
Instruments
The table below analyses financial instruments carried at fair
value, by valuation method. The Group has derivative financial
instruments in the form of economic and cash flow hedging contracts
which are all defined as level two instruments as they are valued
using inputs other than quoted prices that are observable for the
assets or liabilities. The following tables present the group’s
assets and liabilities that are measured at fair value at
30 June 2018, 30 June 2017 and 31
December 2017.
|
|
|
Assets |
Liabilities |
(US$’000) |
Current |
Non-current |
Current |
Non-current |
For the six months
ended 30 June 2018 (Unaudited) |
|
|
|
|
Interest contracts: Designated as cash flow hedges |
514 |
739 |
380 |
- |
Commodity contracts - Fuel: Not designated as hedges |
1,178 |
- |
- |
- |
Total |
1,692 |
739 |
380 |
- |
|
|
|
|
|
|
|
|
|
|
Assets |
Liabilities |
(US$’000) |
Current |
Non-current |
Current |
Non-current |
For the six months
ended 30 June 2017 (Unaudited) |
|
|
|
|
Interest contracts: Designated as cash flow hedges |
528 |
611 |
518 |
- |
Commodity contracts - Fuel: Not designated as hedges |
73 |
159 |
596 |
1,068 |
Total |
601 |
770 |
1,114 |
1,068 |
|
|
|
|
|
|
|
|
|
|
Assets |
Liabilities |
|
(US$’000) |
Current |
Non-current |
Current |
Non-current |
|
For the year ended
31 December 2017 (Audited) |
|
|
|
|
|
Interest contracts: Designated as cash flow hedges |
531 |
667 |
481 |
- |
|
Commodity contracts - Fuel: Not designated as hedges |
2,088 |
240 |
- |
- |
|
Total |
2,619 |
907 |
481 |
- |
|
|
|
|
|
|
|
|
|
15. Inventories
|
|
For the six months ended
30 June |
For
the year ended
31 December |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Raw
materials |
|
|
|
|
Ore in
stockpiles |
|
17,563 |
14,041 |
22,253 |
Mine operating supplies |
|
124,129 |
154,859 |
117,946 |
Work in process |
|
4,974 |
10,807 |
5,103 |
Finished products |
|
|
|
|
Gold
doré/bullion |
|
10,467 |
7,084 |
7,078 |
Gold,
copper and silver concentrate1 |
|
139,500 |
93,901 |
139,500 |
Total
current portion of inventory |
|
296,633 |
280,692 |
291,880 |
Non-current ore in stockpiles |
|
129,318 |
115,775 |
133,550 |
Total |
|
425,951 |
396,467 |
425,430 |
1 Gold, copper and silver concentrate on hand relate to
finished products at Bulyanhulu (US$88.5
million) and Buzwagi (US$51.0
million) due to the inability to export concentrate since
March 2017.
16. Other Assets
a) Other current
assets
|
|
For the six months ended
30 June |
For
the year ended
31 December |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Current portion of indirect tax receivables1 |
|
54,289 |
157,936 |
38,285 |
Other
receivables and advance payments2 |
|
51,090 |
32,932 |
31,870 |
Total |
|
105,379 |
190,868 |
70,155 |
1 The current portion of indirect tax receivables included
an amount of US$46.5 million
(December 2017: US$31.4 million) relating to North Mara and
US$2.0 million (December 2017: nil) at Buzwagi as it was expected
that the current portion will be recovered through offsets against
corporate income tax, as agreed under the MOS entered into in 2012,
within the next year. Indirect tax receivables in other corporate
and exploration entities amounts to US$6.8
million.
2 Other receivables and advance payments relate to
prepayments for insurance and income taxes offset against
outstanding refunds for VAT and fuel levies and current amounts
receivable from the NSSF of US$7.4
million (2017: US$4.8
million).
b) Other non-current
assets
|
|
For the six months ended
30 June |
For
the year ended
31 December |
|
|
(Unaudited) |
(Unaudited) |
(Audited) |
(US$’000) |
2018 |
2017 |
2017 |
Amounts due from Government1 |
|
8,880 |
8,002 |
11,629 |
Operating lease prepayments – TANESCO powerlines |
|
285 |
809 |
374 |
Prepayments – Acquisition of rights over leasehold
land2 |
|
33,410 |
42,250 |
35,948 |
Non-current portion of indirect tax receivables3 |
|
118,236 |
6,897 |
132,405 |
Village housing |
|
121 |
254 |
151 |
Deferred finance charges |
|
119 |
262 |
201 |
Total |
|
161,051 |
58,474 |
180,708 |
1 Included in this amount are amounts receivable from the
NSSF of US$4.4 million (2017:
US$5.8 million).
2 Prepayments made to the landowners in respect of
acquisitions of the rights over the use of the leasehold
land.
3 The non-current portion of indirect tax receivables was
subject to discounting to its current value using a discount rate
of 6.5% (December 2017: 6.5%). There
was no discounting charge in 2018 in the income statement
(December 2017: US$13.3 million).
17. Non-current assets classified as
held for sale
After period end, OreCorp, Acacia’s JV partner in the Nyanzaga
Project, has executed its option under the earn-in agreement to
increase its stake to 51% in the project through the payment of
US$3.0 million to Acacia. Further to
that, Acacia has signed a conditional agreement to sell its
remaining 49% stake to OreCorp for US$7.0
million and a net smelter royalty capped at US$15 million based on future production. In line
with the applicable accounting standard and driven by the
uncertainty surrounding the current environment, management did not
recognise an asset for the right to the royalty. As a result of the
agreement, and Management’s commitment to a sale, Acacia expects to
recover the value of the asset through sale and not through value
in use and as such has valued the asset at fair value less costs to
sell of US$10.0 million and recorded
an impairment charge of US$24.2
million and reclassified the intangible asset to non-current
assets held for sale on the balance sheet.
18. Borrowings
During 2013, a US$142 million
facility was put in place to fund the bulk of the costs of the
construction of one of Acacia’s key growth projects, the Bulyanhulu
CIL Expansion project (“Project”). The Facility is collateralised
by the Project, has a term of seven years with a spread over Libor
of 250 basis points. In common with borrowing agreements of this
nature the facility includes various covenants as well as a
material adverse effect clause. The interest rate has been fixed at
3.6% through the use of an interest rate swap. The 7 year Facility
is repayable in equal US$14.2 million
bi-annual instalments over the term of the Facility, after a two
year repayment holiday period. The full facility of US$142 million was drawn at the end of 2013. The
first principal payment of US$14.2
million was paid in H2 2015 and regular repayments have been
made each half year. As at 30 June
2018 the balance owing was US$56.8
million (2017: US$85.2
million) and all covenants have been complied with. Interest
accrued to the value of US$0.5
million (2017: US$0.6 million)
was included in accounts payable at the end of the period. Interest
incurred on the borrowings as well as hedging losses on the
interest rate swap for the period ended 30
June 2018 was US$1.1 million
(2017: US$1.2 million).
19. Cash flow – other items
a) Operating cash flows - other
items
Movements relating to working capital items
|
For the six months ended
30 June |
For
the year ended
31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
(in
thousands of United States dollars) |
2018 |
2017 |
2017 |
Indirect and corporate taxes1 |
(28,260) |
(51,047) |
(89,560) |
Increase in indirect tax receivable |
(4,956) |
(33,747) |
(51,703) |
Income
tax paid – Final |
(4,187) |
- |
(3,257) |
Income
tax paid - Provisional |
(19,117) |
(17,300) |
(34,600) |
Other
current assets |
(103) |
6,519 |
(10,774) |
Trade
receivables |
1,195 |
6,931 |
745 |
Inventories2 |
(521) |
(113,217) |
(172,180) |
Other
liabilities3 |
(718) |
(7,626) |
(7,301) |
Share
based payments3 |
(1,302) |
(834) |
(1,780) |
Trade
and other payables4 |
4,427 |
795 |
(31,170) |
Other
working capital items5 |
1,120 |
(1,218) |
(1,071) |
Total |
(24,162) |
(159,697) |
(313,091) |
1 During the year, we have made US$23.3 million (2017: US$17.3 million at June and US$37.9 million at December) corporate tax
payments. This has been funded through an offset against current
indirect taxes that were due for refund.
2 The inventory adjustment includes the movement in current
as well as the non-current portion of inventory.
3 The other liabilities adjustment mainly relates to the
revaluation of future share-based payments. During the year,
share-based payments of US$1.3
million (2017: US$0.8 million)
were made.
4 The trade and other payables adjustment exclude statutory
liabilities in the form of income tax payable.
5 Other working capital items include exchange rate losses
associated with working capital.
Other non-cash items
|
For the six months ended
30 June |
For
the year ended
31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
(in
thousands of United States dollars) |
2018 |
2017 |
2017 |
Adjustments for non-cash income statement items: |
|
|
|
Foreign exchange losses |
4,104 |
4,734 |
2,900 |
Discounting of indirect tax receivables |
- |
- |
13,276 |
Provisions added |
- |
2,101 |
7,550 |
Provisions settled |
(4,000) |
- |
- |
Movement in derivatives |
1,066 |
2,431 |
(1,495) |
Share
option expense |
- |
6 |
27 |
Provisional tax offsets |
- |
(17,300) |
- |
Other
non-cash items |
- |
(30) |
92 |
Exchange loss on revaluation of cash balances |
579 |
(151) |
(190) |
Total |
1,749 |
(8,209) |
22,160 |
b) Investing cash flows - other
items
|
For the six months ended
30 June |
For
the year ended
31 December |
|
(Unaudited) |
(Unaudited) |
(Audited) |
(in
thousands of United States dollars) |
2018 |
2017 |
2017 |
Other
long-term receivables |
112 |
29 |
194 |
Rehabilitation expenditure |
(3,258) |
(250) |
(3,106) |
Total |
(3,146) |
(221) |
(2,912) |
20. Commitments and Contingencies
The Group is subject to various laws and regulations which, if
not observed, could give rise to penalties. As at 30 June 2018, the Group has the following
commitments and/ or contingencies.
a) Legal contingencies
As at 30 June 2018, the Group was
a defendant in a number of lawsuits. The plaintiffs are claiming
damages and interest thereon for the alleged loss caused by the
Group due to one or more of the following: unlawful eviction,
termination of services and/or, non-payment for services,
defamation, negligence by act or omission in failing to provide a
safe working environment, unpaid overtime, public holiday
compensation and various other commercial/project disputes. At
present, Acacia considers the majority of cases to be without merit
and therefore the likelihood of any material unfavourable outcome
is remote and therefore no contingency is required.
b) Tax-related contingencies
The TRA has issued a number of tax assessments to the Group
related to past taxation years from 2002-onwards. The Group
believes that the majority of these assessments are incorrect and
has filed objections and appeals accordingly in an attempt to
resolve these matters by means of discussions with the TRA or
through the Tanzanian appeals process. Overall, it is the current
assessment that the relevant assessments and claims by the TRA are
without merit. The claims include a TRA assessment to the value of
US$41.3 million for withholding tax
on certain historic offshore dividend payments paid by Acacia
Mining plc to its shareholders in 2010 to 2013. Acacia is appealing
this assessment on the substantive grounds that, as an English
incorporated company, it is not resident in Tanzania for taxation purposes. The appeal is
currently pending at the Court of Appeal. In addition, the Company
has raised certain tax provisions amounting to US$300 million in aggregate, based on the
potential impact of a comprehensive settlement of all outstanding
tax disputes, including, according to Barrick, historic tax claims,
reflecting the key terms of the Framework announcements by Barrick
and the GoT in October 2017. Refer to
note 9 for further information.
21. Related party balances and transactions
The Group has related party relationships with entities owned or
controlled by Barrick Gold Corporation, which is the ultimate
controlling party of the Group.
The Company and its subsidiaries, in the ordinary course of
business, enter into various sales, purchase and service
transactions and other professional services arrangements with
others in the Barrick Group. These transactions are under terms
that are on normal commercial terms and conditions. These
transactions are not considered to be significant.
At 30 June 2018 the Group had no
loans of a funding nature due to or from related parties
(30 June 2017: zero; 31 December 2017: zero).