19 October 2018
Results for the 3 months ended
30 September 2018 (Unaudited)
Based on IFRS and expressed in US
Dollars (US$)
Acacia Mining plc (“Acacia’’) reports
third quarter results
“During the third quarter Acacia is pleased to have delivered a
strong operational performance, producing 136,640 ounces of
gold at an all-in sustaining cost (“AISC”) of US$880 per ounce sold. This is a testament to the
resilience and dedication of all of our people who continue to do
their very best in the face of what is now an increasingly
challenging operating environment in Tanzania,” said
Peter Geleta, Interim CEO of
Acacia. “Having returned the Group to free cash generation
during the second quarter of this year, I am also pleased to note
that we have maintained this trend, remaining cash flow positive
this quarter, with a net cash position of US$74 million. As a result of our consistently
strong production performance in the year to date, we are now
targeting production to be marginally in excess of 500,000 ounces
for the full year. In line with our on-going cost reduction
strategy, we have also steadily reduced our costs throughout the
year and are now tracking towards the lower end of our AISC
guidance range of US$935-985 per
ounce.”
Mr Geleta also stated: “Against this strong operating
performance, I am, however, deeply concerned about the increasing
risks to the safety and security of our people and the increasingly
challenging operating environment in Tanzania which could impact the outlook for
the business. I am particularly concerned with the criminal
charges now being brought against several current or former
employees over the past week, in connection with matters which are
being raised in the arbitrations with the Government of
Tanzania relating to Bulyanhulu
and Buzwagi. We are seeking to engage with Barrick to understand
how the recent significant escalations of Government actions
against BGML, NMGML and PML and employees will be taken into
account in any further direct discussions between Barrick and the
Government. We will also be reaching out to the Government to
seek the opportunity for direct dialogue regarding the ongoing
disputes between the Government, the Company and the broader Acacia
Group, and also to inform the Government that failing a negotiated
resolution the Company may need to pursue claims under the relevant
bilateral investment treaty.”
Operational Highlights
- Gold production of 136,640 ounces was 29% lower than Q3 2017
but ahead of both Q1 2018 (120,981 ounces) and Q2 2018 (133,778
ounces)
- Gold sales of 135,875 ounces were in line with production
- Expect to exceed the upper end of our full year production
guidance range (435,000 to 475,000 ounces) with production now
expected to be marginally in excess of 500,000 ounces for the
year
- AISC of US$880 per ounce sold was
6% below Q3 2017, 4% lower than Q2 2018 (US$918/oz) and 10% lower than Q1 2018
(US$976/oz), and is now tracking
towards the lower end of the full-year guidance range of
US$935-985 per ounce
Financial Highlights
- Q3 2018 revenue of US$165.6
million, 3% (US$5.0 million)
lower than Q3 2017 due to lower realised gold prices and lower
production
- EBITDA1 of US$44.6 million for
the quarter, 11% down from Q3 2017 mainly due to lower revenue
- Net earnings of US$11.9 million
(US2.9 cents per share), 26% down from US$16.0 million (US3.9 cents per share) in Q3
2017
- Cash generated from operating activities for the quarter of
US$33.6 million was US$56.4 million higher than Q3 2017, mainly due
to negative working capital outflows (US$65.3 million) which impacted Q3 2017
- Net cash1 of US$74 million, an
increase of US$11 million during the
quarter and an increase of US$65
million for the first 9 months of the year
- Cash balance was broadly flat on the prior quarter at
US$117 million, including a loan
repayment of US$14 million during the
quarter
- Paid corporate income tax relating to North Mara of
US$9.6 million, bringing year-to-date
corporate tax paid to US$32.9 million
that was fully offset against the VAT receivable
|
Three months ended 30 September |
Nine months ended 30 September |
| (Unaudited) |
2018 |
2017 |
2018 |
2017 |
| Gold production
(ounces) |
136,640 |
191,203 |
391,399 |
619,406 |
| Gold sold
(ounces) |
135,875 |
132,787 |
386,920 |
445,225 |
| Cash cost
(US$/ounce)1 |
670 |
616 |
690 |
588 |
| AISC
(US$/ounce)1 |
880 |
939 |
922 |
907 |
| Net average realised
gold price (US$/ounce)1 |
1,211 |
1,279 |
1,287 |
1,248 |
| (in
US$'000) |
|
|
|
|
| Revenue |
165,642 |
170,602 |
499,024 |
562,266 |
| EBITDA
1 |
44,562 |
50,302 |
178,132 |
211,717 |
| Adjusted
EBITDA1 |
44,562 |
76,695 |
136,162 |
242,914 |
| Net earnings |
11,850 |
16,038 |
42,727 |
78,581 |
| Basic earnings per
share (EPS) (cents) |
2.9 |
3.9 |
10.4 |
19.2 |
| Adjusted net
earnings1 |
11,850 |
34,513 |
25,369 |
100,419 |
| Adjusted net earnings
per share (AEPS) (cents)1 |
2.9 |
8.4 |
6.2 |
24.5 |
| Cash generated from/
(used in) operating activities |
33,632 |
(22,784) |
92,498 |
(21,469) |
| Capital
expenditure2 |
23,001 |
35,619 |
74,287 |
128,075 |
| Cash balance |
117,036 |
95,321 |
117,036 |
95,321 |
| Total borrowings |
42,600 |
71,000 |
42,600 |
71,000 |
1 These are non-IFRS measures. Refer to page 16 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
Board Changes
During the quarter Acacia announced that Mr Kelvin Dushnisky had tendered his resignation as
a non-executive director of Acacia, effective as at 31 August 2018, and from his position as Chair of
the Board. This was further to the announcements made on
23 July 2018 by Barrick Gold
Corporation (“Barrick”) and by AngloGold Ashanti Limited
(“AngloGold Ashanti”), respectively, of Kelvin’s departure from
Barrick as at the end of August 2018,
and his appointments as CEO and as an Executive Director of
AngloGold Ashanti, effective 31 August
2018.
Further to Kelvin’s resignation, the Board of Acacia appointed
Rachel English, previously one of
Acacia’s Independent Non-Executive Directors, as Interim Chair of
the Board, with effect from 31 August 2018. The Company has
commenced a search process for a new permanent Chair of the
Board.
Update on Discussions between Barrick
and the Government of Tanzania
(“GoT”)
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 direct discussions with the GoT. While the
Company remains excluded from these discussions, Acacia is not
aware of any material developments or progress in the direct
discussions and engagements between the GoT and Barrick through the
quarter.
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 any such future discussions will be subject to review by
the Independent Committee of the Acacia Board of Directors.
Operating Environment
Through the quarter, and over the first three weeks of October,
our businesses and people in Tanzania have been exposed to an increasingly
challenging operating environment, including ad hoc reviews of
historical environmental issues at North Mara, a series of
investigations and demands imposed on our people and businesses
across a number of issues, and culminating in criminal charges
being brought against our people and group companies over the past
week (see below). Each of the recent charges relate to
matters which are subject to or have been introduced into the
existing contractual arbitrations with the GoT (see below). The
Company is currently considering its legal position and is
concerned about the increasing risks to the safety and security of
its people.
International Arbitration
A negotiated resolution remains the preferred outcome to the
Company’s on-going disputes with the GoT.
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 disputes with the GoT to arbitration in accordance with the
dispute resolution processes agreed by the GoT in its Mine
Development Agreements with BGML and PML. The commencement of
arbitration by BGML and PML was necessary to protect their
respective rights and interests and to promote a sustainable
resolution of disputes.
These contractual arbitration processes have continued through
2018, with a number of necessary procedural steps and with the GoT
fully participating, including service of its defence last week.
Each of the charges brought by the Government against Group
companies and the Group’s current and former employees to date
relate to matters which are subject to or have been introduced into
these existing contractual arbitrations with the GoT.
The Company notes that in light of the increasingly challenging
operating environment, including the recent criminal charges, it
will be reaching out directly to the Government to seek the
opportunity for direct dialogue regarding our ongoing disputes, and
the disputes between BGML, PML and NMGML, and also to inform the
Government that failing a negotiated resolution the Company may
need to pursue claims under the bilateral investment treaty between
the United Republic of Tanzania
and the United Kingdom.
Merger Announcement by Barrick and
Randgold Resources
The Company notes the 24 September
2018 announcement by Barrick and Randgold Resources Limited
(“Randgold”) regarding a potential merger between the two
companies. The Company has further noted that the potential
transaction will be subject to the approval of both Barrick and
Randgold shareholders in separate shareholder meetings to be held
on or around 5 November 2018, and is
expected to be effective by Q1 2019, subject to the satisfaction or
waiver of all relevant conditions.
In Barrick’s announcement on 24th
September 2018, and its Circular to shareholders issued on
4th October 2018, Barrick referred
to the Company’s rights under its Relationship Agreement with
Barrick with respect to the Proposal and to any future Barrick
proposal to carry on gold or silver exploration activities in
Africa, or any future Barrick
proposal to acquire an African gold or silver mining business
(“Pre-emption Rights”).
The Company further notes that, following due consideration by a
committee of its independent directors and with its advisors, the
Company has advised Barrick that the Company will not exercise its
Pre-emption Rights in respect of Randgold. The Company has
reserved its position on the exercise of the Pre-emption Rights
with respect to any future proposals by Barrick to acquire or
increase any African gold or silver mining or exploration rights,
irrespective of scale, that Barrick might consider in the future
and in respect of which the Company’s Pre-emptions Rights
apply.
Update on Nyanzaga Project
On 6 September 2018, the Tanzanian
Fair Competition Commission (“FCC”) granted its approval for
OreCorp Tanzania Limited (OreCorp Tanzania) to increase its
interest in Nyanzaga Mining Company Limited (“NMCL”) to 51%. This
move remains subject to: (i) the approval of the newly established
Mining Commission, the application for which was lodged at the same
time as the application for FCC approval; and (ii) the future
payment of US$3 million to the Acacia
Group.
In addition, members of the OreCorp Group have now entered into
a completion agreement with Acacia and other members of the Acacia
Group to allow OreCorp Tanzania to move to 100% ownership of NMCL,
and thereby 100% ownership of the Nyanzaga Gold Project (Project).
This move remains subject to: (i) the Tanzanian regulatory
approvals referred to above; (ii) the grant of the Special Mining
Licence (SML) in respect of the Project; and (iii) the making of a
future payment of US$7 million to the
Acacia Group. Following completion Acacia will retain a net smelter
return production royalty over the Project, capped at US$15 million.
Both OreCorp and Acacia believe that a simplified ownership
structure of NMCL is beneficial to the future development of the
Project and would enable it to be best placed to provide
significant benefits to Tanzania
and all stakeholders.
Asset Level Discussions with Chinese
Interested Parties
As announced in February 2018, in
response to a number of indicative expressions of interest to
Acacia 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. Noting some media reports
published during the third quarter, Acacia confirms that the
Company is not aware of any new material information regarding the
future ownership of Acacia, any of its Tanzanian businesses or
regarding Barrick’s intentions for its 64% stake in the Company.
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.
Bulyanhulu Reduced Operations and
Optimisation Study Update
In Q3 2017, Acacia took 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 Q3 2018, reduced
operating costs amounted to US$6.6
million, compared to US$16.6
million in H1 2018, and mainly consisted of site overhead
costs including labour, power, camp related costs, security costs
and on-going maintenance related work.
Acacia has been taking the opportunity to progress essential
capital spend of approximately US$7
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 study work
is progressing and is on track to be completed in early Q1 2019.
Preliminary indications from the study suggest a focus on more
continuous higher grade ore and therefore higher margin ounces
which consequently may lead to a smaller initial reserve base than
currently estimated. We expect to be in a position to provide
further details during Q1 2019.
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 socio-economic
advancement, including the realisation of the Government’s
Development Vision 2025.
As at the end of Q3 2018, Acacia had paid a total of
US$97.9 million in taxes and
royalties in the year to date. This is made up of provisional
corporate tax payments for the year of US$28.7 million, a final 2017 corporate tax
payment of US$4.2 million, royalties
of US$38.4 million, payroll taxes of
US$18.5 million and other taxes of
US$8.2 million.
During the quarter, our Sustainable Communities initiatives
contributed to tangible benefits for the local communities around
our operations with the completion of a number of community
projects supporting advancements in water and sanitation,
education, health, and local infrastructure.
In July 2018 the Tanzanian Prime
Minister officially opened Acacia-funded facilities in the locality
of our Buzwagi mine, including the Mwendakulima Health Centre, the
Kahama football stadium and a new girls’ dormitory block at a local
secondary school. Meanwhile our Bulyanhulu mine entered into an
agreement with the local district council to contribute
US$250,000 towards the construction
of 32 medical dispensaries in support of the Government’s health
agenda for the region.
In late September, a national disaster saw the MV Nyerere ferry
sink on Lake Victoria tragically claiming over 228 lives. Acacia
donated 80 million Tanzanian shillings (approximately US$35,000) to the GoT in support of relief
efforts. We also sent a team to assist in the rescue mission, as
well as providing other support and medical equipment.
In terms of our daily operations in Tanzania, Acacia continues to progress a
number of strategies within its Supply Chain function with a view
to further increasing its annual spend with Tanzanian-owned
businesses. Acacia has always maintained a policy of sourcing local
first, where viable, and the plans form part of our continued
efforts to grow our annual local spend. Based on our current plans,
we expect that by Q1 2019 we will achieve a further 10% increase in
our total annual spend with suppliers that are Tanzanian-owned.
This will take the Group’s annual spend with Tanzanian-owned
businesses on goods and services – including construction
materials, fuel and lubricants, as well as internet and security
services – to US$170 million.
Furthermore, if the Bulyanhulu mine were to restart in the future,
and run at full capacity, we expect a significant further increase
in our annual local spend. From 2016 to date the Acacia Group has
spent US$500 million with
Tanzanian-owned suppliers.
Indirect Taxation Update
The net indirect tax receivables balance increased during Q3
2018 from US$172.5 million at
30 June 2018 to US$175.2 million at 30
September 2018. This increase was driven by a further
US$13.5 million of VAT outflows, for
which no cash VAT refunds were received, offset by our third
provisional corporate tax payment for 2018 relating to North Mara
of US$9.6 million and foreign
exchange revaluation losses and other adjustments of US$1.2 million. The provisional corporate tax
payments have been offset against indirect tax receivables in line
with an existing agreement with the Tanzanian Revenue
Authority.
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 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$76
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 GoT and subject to our on-going disputes with the GoT.
Recent Charges Brought by the
Tanzanian Prevention and Combating of Corruption Bureau (“PCCB”)
Against Current and Former Employees
Post-period end, on 10 October
2018, one of the Group’s employees in Tanzania, a South African national, was
charged by the Tanzanian Prevention and Combating of Corruption
Bureau (PCCB) with an offence under the Tanzanian Prevention and
Combating of Corruption Act. The employee has pleaded not guilty,
and been granted bail. The charges relate to the historical
activities of a Land Task Force (LTF) conceived and agreed between
the GoT and North Mara Gold Mine Limited (NMGML) in 2012 to create
a transparent, safe, fair and inclusive process for valuing land
that might be purchased by agreement around the North Mara mine,
and which operated between 2013 and 2015.
The Company notes that the employee who has been charged was not
involved in the LTF process, and appears to have been charged due
to his being responsible for signing cheques for approved payments
made by NMGML at the time, including a cheque regarding the agreed
LTF process in 2013. Two former government officials were charged
in connection with receiving funds paid by NMGML through the same
transaction, while a former employee of NMGML, who left the Group
in 2013, was named in connection with the transaction but the
Company does not believe he has been charged.
The Company further notes that the PCCB laid additional charges
against a number of government officials in connection with their
relationships with NMGML and North Mara, one of which also relates
to the LTF exercise, but no further charges were laid against NMGML
or any other of the Group’s employees. The Company notes that
historical allegations and issues around the creation and
implementation of the LTF at North Mara from 2013 to 2015 have been
subsequently investigated over the past four years, including by
the PCCB itself since early 2017, and NMGML and the Company have
been working with and assisting the responsible authorities
throughout.
Also post period-end the Company announced on 17 October that a
current and a former employee of its Tanzanian businesses, together
with three individual companies, were charged by the PCCB with a
number of different offences including breaches of the Tanzanian
Anti-Money Laundering Act. Each of the companies and both the
current employee and the former employee have pleaded not guilty to
all charges. The Company notes with concern that under
Tanzanian law offences under the Anti-Money Laundering Act are not
bailable, and, accordingly, the accused have not been released on
bail.
The Company is in the process of analysing the charges brought
by the PCCB, and will be able to comment further once more details
are known. A total of 39 charges have been brought, either
against the current and the former employee and/or against one or
more of the Company’s operating subsidiaries in Tanzania, Pangea Minerals Limited (“PML”),
Bulyanhulu Gold Mine Limited (“BGML”) and North Mara Gold Mine
Limited (“NMGML”), as well as a Canadian company, Explorations
Minieres du Nord Ltd. The majority of the 39 charges and
allegations brought by the PCCB appear to relate to the historical
structuring and financing of PML, BGML and NMGML dating back as far
as 2008, prior to the creation of the Acacia Group. The
charges are wide ranging and include: tax evasion;
conspiracy; a charge under organised crime legislation; forgery;
money laundering and corruption.
The great majority of the allegations in the criminal
proceedings by the GoT relate to matters already being considered
in the arbitrations commenced by BGML and PML in July 2017 regarding their disputes with the GoT
under their respective MDAs, which are progressing towards a
hearing and in which the GoT are fully participating.
As the Company has previously announced, the PCCB have been
reported in Tanzanian media to have stated that the arrests and
charges on 17th October formed part of their “ongoing
investigation into natural resources exploitation” and as part of
the “war that the government is waging in the Minerals sector”, and
alleged that the two people arrested and later charged had
“occasioned the Government losses”. Acacia is committed to running
its business to the highest ethical standards and is taking these
matters extremely seriously.
Outlook
We are pleased to report a strong operational performance for
the year to date, delivering 391,000 gold ounces in the nine months
to the end of September 2018. As a
result, we expect to exceed the upper end of our full year
production guidance range of 435,000 to 475,000 ounces and are now
targeting production to be marginally in excess of 500,000 ounces
for the full year.
In line with our clear cost reduction strategy, we have also
steadily reduced our costs throughout the year and are now tracking
towards the lower end of our AISC guidance range of US$935-985 per ounce and cash costs per ounce of
between US$690-720 per ounce. Year to
date capital expenditure amounted to US$74
million, in line with expectations, and we continue to
expect full year group capital expenditure of approximately
US$100 million. While the
strong operational performance through the quarter has demonstrated
the operating resilience of our businesses and our people, the
Company is, however, concerned regarding the increasingly
challenging operating environment and the increasing risks to the
safety and security of itspeople. The Company is seeking to
engage with Barrick to understand how the recent significant
escalations of Government actions against BGML, NMGML and PML and
employees will be taken into account in any further direct
discussions between Barrick and the GoT. Pending any
comprehensive and sustainable resolution of the situation, the
Company and Group companies will continue to seek to protect the
interests of all stakeholders through the existing contractual
arbitrations, and through direct engagements with the Government in
the context of the Company’s bilateral investment treaty
rights.
| Key
Statistics |
|
Three months ended
30 September |
Nine months ended 30 September |
|
|
(Unaudited) |
|
2018 |
2017 |
2018 |
2017 |
| Tonnes mined |
Kt |
4,416 |
8,608 |
12,601 |
26,647 |
| Ore tonnes mined |
Kt |
1,085 |
4,221 |
2,764 |
11,433 |
| Ore tonnes processed
incl. tailings reclaim |
Kt |
2,373 |
2,004 |
6,943 |
6,864 |
| Process recovery rate
incl. tailings reclaim |
% |
87.3% |
90.9% |
87.1% |
90.0% |
| Head grade incl.
tailings reclaim |
g/t |
2.1 |
3.3 |
2.0 |
3.1 |
| Ore tonnes processed
excl. tailings reclaim |
Kt |
1,875 |
1,922 |
5,541 |
5,959 |
| Process recovery rate
excl. tailings reclaim |
% |
92.4% |
91.7% |
91.8% |
92.7% |
| Head grade excl.
tailings reclaim |
g/t |
2.3 |
3.3 |
2.2 |
3.4 |
| Gold production |
oz |
136,640 |
191,203 |
391,399 |
619,406 |
| Gold sold |
oz |
135,875 |
132,787 |
386,920 |
445,225 |
| Copper production |
Klbs |
- |
3,832 |
- |
12,897 |
| Copper sold |
Klbs |
- |
37 |
- |
1,341 |
| Cash cost per tonne
milled excl. tailings reclaim1 |
US$/t |
46 |
41 |
46 |
42 |
| Cash cost per tonne
milled incl. tailings reclaim1 |
US$/t |
38 |
41 |
38 |
38 |
| Per ounce data |
|
|
|
|
|
| Average spot
gold price2 |
US$/oz |
1,213 |
1,278 |
1,282 |
1,251 |
| Net average
realised gold price1 |
US$/oz |
1,211 |
1,279 |
1,287 |
1,248 |
| Total cash
cost1 |
US$/oz |
670 |
616 |
690 |
588 |
| All-in
sustaining cost1 |
US$/oz |
880 |
939 |
922 |
907 |
| Average realised
copper price |
US$/lbs |
- |
2.68 |
- |
2.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial results
|
Three months ended
30 September |
|
Nine months ended
30 September |
| (Unaudited, in US$'000
unless otherwise stated) |
2018 |
2017 |
|
2018 |
2017 |
| Revenue |
165,642 |
170,602 |
|
499,024 |
562,266 |
| Cost of sales |
(113,119) |
(105,538) |
|
(334,345) |
(349,505) |
| Gross
profit |
52,523 |
65,064 |
|
164,679 |
212,761 |
| Corporate
administration |
(6,336) |
(6,780) |
|
(17,640) |
(19,300) |
| Share based
payments |
(177) |
637 |
|
1,229 |
8,422 |
| Exploration and
evaluation costs |
(3,350) |
(5,295) |
|
(10,581) |
(21,445) |
| Corporate social
responsibility expenses |
(2,130) |
(2,120) |
|
(5,213) |
(5,859) |
| Impairment
charges |
- |
- |
|
(24,234) |
- |
| Other charges |
(16,945) |
(24,186) |
|
(20,566) |
(43,803) |
| Profit before net
finance expense and taxation |
23,585 |
27,320 |
|
87,674 |
130,776 |
| Finance income |
234 |
261 |
|
1,042 |
1,804 |
| Finance expense |
(2,172) |
(2,982) |
|
(10,412) |
(8,436) |
| Profit before
taxation |
21,647 |
24,599 |
|
78,304 |
124,144 |
| Tax expense |
(9,797) |
(8,561) |
|
(35,577) |
(45,563) |
| Net profit for the
period |
11,850 |
16,038 |
|
42,727 |
78,581 |
|
|
|
1 These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to “Non IFRS measures”
on page 16 for definitions.
2 Reflect the London PM fix price.
For further information, please visit our website:
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 conference call on our Q3 results will be held for analysts
and investors at 09:00 BST today. The
access details for the conference call are as follows:
| Participant dial
in: |
+44 (0)20 3936 2999 |
| Participant access code: |
30 43 00 |
A replay of the call will be available for 7 days
| Replay dial in: |
+ 44 (0)20 3936 3001 |
| Access code: |
772251 |
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.
Operating Review
The Group achieved gold production for the third quarter of
136,640 ounces, ahead of both production in Q1 2018 (120,981
ounces) and Q2 2018 (133,778 ounces), and demonstrating a
consistently strong production performance in the year to date.
Although, on a year on year basis, Q3 2018 production was 29% lower
than Q3 2017 (191,203 ounces), this was primarily attributable to
the move to reduced operations at Bulyanhulu and to stockpile
processing at Buzwagi in 2018. This was partly offset by higher
gold production at North Mara driven by higher head grades.
Production for the quarter exceeded management expectations due to
strong production performances across all three sites. Gold sold
for the quarter of 135,875 ounces was broadly in line with
production.
North Mara’s production of 89,287 gold ounces for the
quarter was 24% higher than Q3 2017 (72,011 ounces) mainly due to
24% higher head grades compared to Q3 2017, primarily driven by
higher grade ore received from the eastern part of the Nyabirama
open pit. Gold sold of 89,475 ounces for the quarter was in line
with production and 20% higher than in Q3 2017. AISC of
US$814 per ounce sold was 6% lower
than in Q3 2017 (US$864/oz) as a
result of higher production, partly offset by higher cash
costs.
At Buzwagi, gold production of 36,460 ounces for Q3 2018
was 47% lower than in Q3 2017 (69,097 ounces), as a result of the
mine transitioning to a lower grade stockpile processing operation
in 2018 in line with its remaining life of mine plan. Mining of the
final cut of higher grade ore at the bottom of the pit commenced
during the quarter, resulting in slightly higher than expected
production, and is due to be completed in Q4. Gold sold for the
quarter of 35,570 ounces was in line with production and 11% higher
than Q3 2017 due to the inability to sell concentrate following the
export ban which partially impacted Q3 2017 and the decision, taken
in September 2017, to produce gold
solely in doré form going forward. AISC per ounce sold of
US$1,018 was 46% higher than Q3 2017,
mainly driven by higher cash costs due to the lower production base
and drawdown in ore inventory as a result of lower grade stockpile
processing, partly offset by lower sustaining capital spend and
lower corporate administration cost allocations.
Bulyanhulu produced 10,893 gold ounces for the quarter,
78% below Q3 2017 (50,094 ounces). During the quarter all
production continued to be produced from the retreatment of
tailings as a result of the underground mine being placed on
reduced operations in late 2017. Gold sold for the quarter of
10,830 ounces was in line with production. AISC per ounce sold for
the quarter of US$727 was 47% lower
than Q3 2017 (US$1,365/oz) driven by
reduced capital and operating spend, partly offset by the lower
production base, but excludes reduced operations costs of
US$6.6 million.
Total tonnes mined during the quarter were 4.4 million tonnes,
49% lower than Q3 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 prior year. Total ore tonnes mined of 1.1 million
tonnes were 74% lower than Q3 2017, primarily due to the cessation
of mining activities at Buzwagi and Bulyanhulu, although 0.2
million tonnes was mined at Buzwagi.
Ore tonnes processed for the quarter of 2.4 million tonnes were
18% higher than the comparative period in 2017, mainly driven by
the higher tonnes processed at Bulyanhulu, after production from
reprocessed tailings was temporarily halted due to water shortages
in Q3 2017, as well as higher tonnes processed at Buzwagi. Head
grade for the quarter (excluding tailings retreatment) of 2.3g/t,
was 30% lower than Q3 2017 (3.3g/t) due to the lower grade
stockpile processing at Buzwagi, partly offset by higher head
grades at North Mara as a result of higher grades received from the
open pit mine.
Cash costs of US$670 per ounce
sold for the quarter were 9% higher than in Q3 2017, primarily due
to:
- The drawdown of ore stockpiles at Buzwagi and a lower build-up
in finished gold inventory compared to Q3 2017 (US$390/oz), given Q3 2017 was impacted by the
build- up of finished gold inventory as a result of the concentrate
export ban.
This was partly offset by:
- Savings in direct mining costs (US$311/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$5/oz) driven by lower sales
volumes; and
- The higher production base at North Mara (US$14/oz).
All-in sustaining cost of US$880
per ounce sold for the quarter was 6% lower than in Q3 2017, mainly
due to lower capitalised development costs relating to Bulyanhulu
and North Mara (US$84/oz) and the
lower sustaining capital spend at Bulyanhulu and Buzwagi
(US$21/oz), partly offset by higher
cash costs (refer to above) (US$54/oz).
Cash generated from operating activities totalled US$33.6 million for the quarter, an increase of
US$56.4 million over Q3 2017
(US$22.8 million outflow), and was
mainly due to negative working capital outflows (US$65.3 million) which impacted Q3 2017 relating
to the build-up of concentrate stock on hand, partly offset by
lower EBITDA (US$5.7 million).
Capital expenditure for the quarter amounted to US$23.0 million compared to US$35.6 million in Q3 2017, a decrease of 35%.
Capital expenditure primarily comprised of capitalised development
and waste stripping (US$11.3
million), mobile equipment and component change-outs
(US$3.5 million) and capitalised
drilling (US$2.8 million), all at
North Mara, as well as the Bulyanhulu optimisation study costs
(US$0.9 million), asset integrity
work to Bulyanhulu’s processing facilities (US$0.7 million) and the investment in Buzwagi’s
tailing storage facility (US$0.3
million).
Mine Site Review
North Mara
Key statistics
|
|
Three months ended 30 September |
|
Nine months ended 30 September |
| (Unaudited) |
|
2018 |
2017 |
|
2018 |
2017 |
| Key operational
information: |
|
|
|
|
|
|
| Ounces produced |
oz |
89,287 |
72,011 |
|
251,976 |
251,589 |
| Ounces sold |
oz |
89,475 |
74,585 |
|
248,345 |
252,715 |
| Cash cost per ounce
sold1 |
US$/oz |
572 |
550 |
|
582 |
473 |
| AISC per ounce
sold1 |
US$/oz |
814 |
864 |
|
871 |
774 |
| Open pit: |
|
|
|
|
|
|
| Tonnes mined |
Kt |
4,035 |
3,977 |
|
11,849 |
11,727 |
| Ore tonnes mined |
Kt |
713 |
813 |
|
2,021 |
2,349 |
| Mine grade |
g/t |
2.0 |
1.6 |
|
2.0 |
1.8 |
|
Underground: |
|
|
|
|
|
|
| Ore tonnes
trammed |
Kt |
202 |
185 |
|
573 |
501 |
| Mine grade |
g/t |
7.4 |
7.9 |
|
7.8 |
8.6 |
| Processing
information: |
|
|
|
|
|
|
| Ore milled |
Kt |
709 |
714 |
|
2,119 |
2,133 |
| Head grade |
g/t |
4.2 |
3.4 |
|
4.0 |
4.0 |
| Mill recovery |
% |
93.2% |
91.5% |
|
92.8% |
92.2% |
| Cash cost per tonne
milled1 |
US$/t |
72 |
57 |
|
68 |
56 |
| Capital
Expenditure |
|
|
|
|
|
|
| - Sustaining
capital2 |
US$('000) |
6,303 |
5,016 |
|
19,984 |
17,193 |
| - Capitalised
development |
US$('000) |
11,258 |
14,456 |
|
39,190 |
47,738 |
| - Expansionary
capital |
US$('000) |
2,780 |
2,442 |
|
6,448 |
6,931 |
|
|
20,341 |
21,914 |
|
65,622 |
71,862 |
| - Non-cash
reclamation asset adjustments |
US$('000) |
(1,254) |
430 |
|
(2,419) |
374 |
| Total capital
expenditure |
US$('000) |
19,087 |
22,344 |
|
63,203 |
72,236 |
1These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to ‘Non-IFRS measures”
on page 16 for definitions.
2 Includes land purchases recognised as long term
prepayments.
Operating performance
Gold production for the quarter of 89,287 ounces was 24% higher
than Q3 2017 (72,011 ounces), driven by 24% higher head grades as a
result of higher grades received from the eastern part of Nyabirama
open pit and the impact of good plant recovery rates. Gold ounces
sold for the quarter of 89,475 ounces was broadly in line with
production and 20% higher than in Q3 2017.
Cash costs of US$572 per ounce
sold were 4% higher than Q3 2017 (US$550/oz), mainly driven by higher direct mining
costs (US$96/oz), largely due to
lower capitalised stripping costs driven by a lower strip ratio in
Nyabirama pit Stage 4, higher consumables, maintenance and external
services costs; as well as higher sales-related costs linked to the
increase in the royalty rate and the higher sales base
(US$21/oz). This was partly offset by
the higher production base (US$91/oz).
AISC of US$814 per ounce sold was
6% lower than in Q3 2017 (US$864/oz)
primarily as a result of the positive impact of higher sales
volumes on individual cost items (US$52/oz) and lower capitalised stripping costs
driven by a lower strip ratio in Nyabirama pit Stage 4
(US$36/oz), partly offset by higher
cash costs discussed above (US$22/oz)
and higher sustaining capital spend (US$14/oz).
Total tonnes mined of 4.2 million tonnes were in line with Q3
2017. Waste tonnes moved were 5% higher than the prior year quarter
and ore tonnes mined were 8% below 2017, driven by lower ore tonnes
mined at the open pit.
We continued to undertake drilling programmes at Gokona during
the period as we look to demonstrate the long term potential of the
deposit, while a pre-feasibility study is underway 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 (refer to the Exploration Review section for more detail).
Capital expenditure for the period before reclamation
adjustments amounted to US$20.3
million, 7% lower than in Q3 2017 (US$21.9 million). Key capital expenditure
included capitalised stripping costs (US$6.8
million), capitalised underground development costs
(US$4.5 million), capitalised
drilling mainly for reserve and resource development at Gokona
underground (US$2.8 million),
investment in mobile equipment and component change-outs
(US$3.5 million) and investment in
fixed equipment and infrastructure (US$0.9
million).
Buzwagi
Key statistics
|
|
Three months ended 30 September |
|
Nine months ended 30 September |
| (Unaudited) |
|
2018 |
2017 |
|
2018 |
2017 |
| Key operational
information: |
|
|
|
|
|
|
| Ounces produced |
oz |
36,460 |
69,097 |
|
109,560 |
195,181 |
| Ounces sold |
oz |
35,570 |
31,938 |
|
107,875 |
85,032 |
| Cash cost per ounce
sold1 |
US$/oz |
950 |
564 |
|
960 |
647 |
| AISC per ounce
sold1 |
US$/oz |
1,018 |
695 |
|
1,031 |
742 |
| Copper production |
Klbs |
- |
2,738 |
|
- |
8,991 |
| Copper sold |
Klbs |
- |
47 |
|
- |
752 |
| Mining
information: |
|
|
|
|
|
|
| Tonnes mined |
Kt |
179 |
4,259 |
|
179 |
13,823 |
| Ore tonnes mined |
Kt |
170 |
3,037 |
|
170 |
7,988 |
| Processing
information: |
|
|
|
|
|
|
| Ore milled |
Kt |
1,165 |
1,020 |
|
3,421 |
3,215 |
| Head grade |
g/t |
1.1 |
2.2 |
|
1.1 |
2.0 |
| Mill recovery |
% |
90.5% |
94.0% |
|
89.7% |
95.7% |
| Cash cost per tonne
milled1 |
US$/t |
29 |
18 |
|
30 |
17 |
| Capital
Expenditure |
|
|
|
|
|
|
| - Sustaining
capital |
US$('000) |
686 |
2,238 |
|
2,867 |
3,103 |
| - Non-cash
reclamation asset adjustments |
US$('000) |
(338) |
215 |
|
34 |
214 |
| Total capital
expenditure |
US$('000) |
348 |
2,453 |
|
2,901 |
3,317 |
1These are non-IFRS
financial performance measures with no standard meaning under IFRS.
Refer to “Non-IFRS measures” on page 16 for definitions.
Operating performance
Gold production for the quarter of 36,460 ounces was 47% lower
than the comparative period in 2017 as a result of Buzwagi
transitioning primarily to a lower grade stockpile processing
operation compared to the processing of run-of-mine ore in the
previous period. Mining of the final cut of higher grade ore at the
bottom of the pit commenced during the quarter, resulting in
slightly higher than expected production, and is due to be
completed in Q4. Gold sold for the quarter of 35,570 ounces was in
line with production and 11% higher than Q3 2017 due to the
inability to sell concentrate following the export ban which
partially impacted Q3 2017 and the decision, taken in September 2017, to produce gold solely in doré
form going forward.
Cash costs for the quarter of US$950 per ounce sold were 68% higher than Q3
2017 (US$564/oz) due to the higher
average cost valuation relating to the drawdown of lower grade
stockpiles compared to the higher grade mining ounces in Q3
2017.
AISC per ounce sold of US$1,018
was 46% higher than Q3 2017 of US$695/oz, primarily driven by higher cash costs
as explained above (US$386/oz),
partly offset by lower sustaining capital spend (US$44/oz) and lower corporate cost allocations
(US$16/oz).
Capital expenditure before reclamation adjustments amounted to
US$0.7 million, 69% lower than Q3
2017 (US$2.2 million), mainly
consisting of processing facilities upgrades (US$0.4 million) and the expansion of the tailings
storage facilities which started late in 2017 (US$0.3 million).
Bulyanhulu
Key statistics
|
|
Three months ended 30 September |
|
Nine months ended 30 September |
| (Unaudited) |
|
2018 |
2017 |
|
2018 |
2017 |
| Key operational
information: |
|
|
|
|
|
|
| Ounces produced |
oz |
10,893 |
50,094 |
|
29,863 |
172,636 |
| Ounces sold |
oz |
10,830 |
26,265 |
|
30,700 |
107,479 |
| Cash cost per ounce
sold1 |
US$/oz |
564 |
863 |
|
617 |
812 |
| AISC per ounce
sold1 |
US$/oz |
727 |
1,365 |
|
792 |
1,346 |
| Copper production |
Klbs |
- |
1,095 |
|
- |
3,906 |
| Copper
sold2 |
Klbs |
- |
(11) |
|
- |
588 |
|
Run-of-mine: |
|
|
|
|
|
|
| Underground ore tonnes
hoisted |
Kt |
- |
187 |
|
- |
596 |
| Ore milled |
Kt |
- |
189 |
|
- |
612 |
| Head grade |
g/t |
- |
9.0 |
|
- |
8.6 |
| Mill recovery |
% |
- |
88.9% |
|
- |
90.1% |
| Ounces produced |
oz |
- |
48,683 |
|
- |
153,279 |
| Cash cost per tonne
milled1 |
US$/t |
- |
104 |
|
- |
124 |
| Reprocessed
tailings: |
|
|
|
|
|
|
| Ore milled |
Kt |
498 |
82 |
|
1,402 |
905 |
| Head grade |
g/t |
1.3 |
1.3 |
|
1.2 |
1.4 |
| Mill recovery |
% |
53.3% |
42.0% |
|
53.7% |
46.8% |
| Ounces produced |
oz |
10,893 |
1,411 |
|
29,863 |
19,356 |
| Capital
Expenditure |
|
|
|
|
|
|
| - Sustaining
capital |
US$('000) |
506 |
2,881 |
|
2,615 |
11,480 |
| - Capitalised
development |
US$('000) |
- |
8,152 |
|
- |
39,206 |
| - Expansionary
capital |
US$('000) |
1,385 |
57 |
|
2,919 |
1,039 |
|
|
1,891 |
11,090 |
|
5,534 |
51,725 |
| - Non-cash
reclamation asset adjustments |
US$('000) |
(1,394) |
386 |
|
(3,140) |
577 |
| Total capital
expenditure |
US$('000) |
497 |
11,476 |
|
2,394 |
52,302 |
1These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to ‘Non-IFRS measures”
on page 16 for definitions.
2 Negative sales quantities
in 2017 relate to the reversal of sales recorded during Q3
2017.
Operating performance
Gold production for Q3 2018 of 10,893 ounces was 78% lower than
the same period in 2017 as a result of the decision to transition
to reduced operations at Bulyanhulu. Production consisted solely of
the reprocessing of tailings and was 9,482 ounces higher than Q3
2017 which was negatively impacted by a drought in the Kahama
district and resulted in a temporary halt in production. Gold sold
for the quarter of 10,830 ounces was 59% lower than Q3 2017 but in
line with the lower production base.
Cash costs of US$564 per ounce
sold were 35% lower than Q3 2017 (US$863), mainly due to lower direct mining costs
compared to the prior year period as a result of Bulyanhulu being
on reduced operations as well as lower sales-related costs driven
by lower sales volumes and partly offset by the lower production
base.
AISC per ounce sold for the period of US$727 was 47% lower than the comparative period
in 2017 (US$1,365/oz), driven by
reduced capital spend, lower operating costs and lower corporate
cost allocations, partly offset by the lower production base, but
excludes reduced operations costs of US$6.6
million for the quarter.
Capital expenditure for the quarter before reclamation
adjustments amounted to US$1.9
million, significantly lower than Q3 2017 (US$11.1 million) due to Bulyanhulu being on
reduced operations and includes the Bulyanhulu optimisation study
costs (US$0.9 million) and asset
integrity work to the processing facilities (US$0.7 million).
Exploration Review
Brownfield Exploration
North Mara – Gokona Underground
A total of 15,929 metres of extension and infill drilling were
completed by four rigs at Gokona Underground during Q3 2018, with a
further 13 holes for 3,339 metres of grade control drilling also
undertaken. Drilling continued to define the deeper parts of the
Central Zone below the 1000mRL elevation; with significant
intercepts returned during the quarter including:
-
UGKD494
6.0m @ 14.0 g/t Au from 165m; and
10.0m @ 5.1 g/t Au from
398m
-
UGKD495
5.0m @ 12.5 g/t Au from 233m
-
UGKD503
25.0m @ 4.6 g/t Au from 269m
-
UGKD512
12.0m @ 4.7 g/t Au from 290m
-
UGKD497
6.0m @ 18.9 g/t Au from 190m
-
UGKD498
23.0m @ 5.3 g/t Au from 173m
-
UGKD499
31.0m @ 7.0 g/t Au from
194m
-
UGKD514
14.0m @ 7.5 g/t Au from 204m; and
9.8m @ 8.6 g/t Au from
241m; and
11.0m @ 13.7 g/t Au from
263m
-
UGKD516
22.0m @ 5.0 g/t Au from 84m; and
19.0m @ 6.7 g/t Au from
222m
-
UGKD525
6.0m @ 9.9 g/t Au from 361m; and
16.0m @ 5.4 g/t Au from
396m
The drilling programme also tested the deeper East Zone during
the quarter, where it has been offset to the west of the Gokona
Fault. Several highly significant intercepts were returned with
numerous occurrences of visible gold; most notably from UGKD510
intersecting 23m @ 110.2g/t Au
approximately 400m deeper than the
current East Decline development.
-
UGKD501
20.0m @ 5.0 g/t Au from 564m
-
UGKD502
19.0m @ 8.8 g/t Au from 179m; and
7.0m @ 8.0 g/t Au from
479m; and
10.0m @ 14.1 g/t Au from
505m; and
18.0m @ 17.9 g/t Au from
537m
-
UGKD509
9.0m @ 9.1 g/t Au from 214m
-
UGKD510
23.0m @ 110.2 g/t Au from
426m; and
6.0m @ 14.9 g/t Au from
502m
-
UGKD517
40.0m @ 4.6 g/t Au from 202m
-
UGKD518
12.0m @ 5.5 g/t Au from 201m
-
UGKD519
21.0m @ 19.9 g/t Au from 121m
-
UGKD521
18.0m @ 5.0 g/t Au from 115m
-
UGKD532
22.0m @ 4.5 g/t Au from 248m
Further deep holes are planned to be drilled into the lower East
area during Q4.
Drilling also continued to test the lower grade West Zone below
the 1000mRL elevation, with several more significant intercepts
returned:
- UKGC_01074 12.0m @ 8.6 g/t Au from 125m
- UKGC_01076 10.0m @ 6.0 g/t Au from 197m; and
24.0m @ 8.7 g/t Au from
318m
- UKGC_01078 12.0m @ 10.3 g/t Au from 134m
- UKGC_01080 10.0m @ 12.0 g/t Au from 208m
- UKGC_01081 28.0m @ 3.0 g/t Au from 180m
- UKGC_01082 24.0m @ 3.3 g/t Au from 127m
- UKGC_01083 26.0m @ 3.8 g/t Au from 169m
- UKGC_01084 16.0m @ 9.0 g/t Au from 281m
Gokona Underground Diamond Drilling
2018
See www.acaciamining.com for picture
Greenfield Exploration
Acacia sees greenfield exploration as integral to our future
growth strategy and commenced an exploration portfolio review
during the quarter ahead of our 2019 business planning process in
order to further target and refine our exploration spend in
2019.
Kenya
Two diamond rigs operated across the Western Kenya Project
during the quarter with 15 holes drilled totalling 5087 metres. In
addition, prospect scale geological mapping and multi-element soil
geochemical surveys continued.
Liranda Corridor
In May 2017 a maiden resource of
1.31 million ounces of gold at 12.1 grams per tonne was declared
for the Isulu prospect. This resource was unconstrained.
A scoping study was completed in September 2018 and indicates a reduction in the
mineable portion of the resource to 4.7 Mt at 5.92 g/t Au (fully
diluted) containing 894 koz gold with a proposed mining scenario
giving an ore production rate of 400-500 kt/y using mechanised
mining and treated through conventional gravity and CIL
processing. However, the resource can potentially improve
with further drilling and the opportunity exists for the deposit to
be mined using conventional mining methods, which are typically
used in ‘small scale’ mines. Therefore, Acacia will look at
different options and explore the possibility of bringing in a
partner who has the necessary conventional mining expertise to take
the project forward.
The Isulu South East and GAP targets
During the quarter drill testing of the Isulu South East
Prospect and the so-called GAP target (a blind target between Isulu
and Bushiangala) was completed. The Isulu South East target was
based on soil geochemistry and structural interpretation. The GAP
target followed up on a strong VTEM anomaly pointing to a
mineralised intrusive body associated with a distinct hydrothermal
leakage soil anomaly of possible pathfinder elements. The purpose
was to identify possible satellite bodies in the vicinity of a
hypothetical Isulu mine. Three diamond holes totaling 1117 metres
were drilled into the Isulu South East target and another 3 holes,
totaling 1264 metres, into the GAP target.
Mineralisation at Isulu South East is associated with sulfides
(pyrite, pyrrhotite, arsenopyrite and chalcopyrite), quartz
carbonate veining, sericite and minor green mica alteration.
Assays returned broad zones of lower-grade mineralisation
including some medium-grade intervals: (1)
•
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
•
LCD0210:
13.5m @ 0.90 g/t Au from 281m incl of 1m @
7.56g/t Au from 281m
•
LCD0213:
0.5m @ 1.05 g/t Au from 231.6m and 0.6m @
1.16 g/t Au from 235.5m,
1.4m @ 4.4 g/t Au from
374.6m and 0.6m @ 1.68 g/t Au from 383m
•
LCD0216:
1m @1.81 g/t Au from 113.5m.
The intersected mineralisation is non-economic for an
underground scenario and drilling was stopped.
(1) The
first three holes were drilled in Q2 but assays only became
available in Q3
Drilling on the GAP target started at the end of June and was
completed in August 2018. No
intrusive was intersected at the modeled depth of 500 metres.
Several wide and weakly mineralised shear zones were intersected.
The best grade was LCD0214 (IBG): 0.5m @ 1.15 g/t Au from 408.80m and on this basis no follow up can be
recommended.
Lake Zone
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.
Based on the encouraging results of the DD holes which totalled
1604 metres drilled in Q2, a follow-up drilling programme commenced
in August. Nine diamond drill holes totalling 2738 metres have been
drilled to follow-up recent significant intercepts and test strike
the dip/plunge extensions of the mineralisation. The assay results
from this are still awaited.
Burkina
Faso
During Q3 we continued to explore our four joint-venture
properties covering over 2,700km² in the highly prospective Houndé
Belt in southwest Burkina Faso.
Due to the onset of the rainy season at the end of July, no
fieldwork was carried out during the months of August and
September.
South Houndé JV (Sarama Resources Limited) – current interest
50%
Tankoro Corridor- MM and MC Zones
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 with work still ongoing.
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. Regional soil sampling identified a number of
anomalies.
The programme for the remainder of the year on the Central
Houndé project comprises 5000 metres of air-core drilling to test
the continuity of the gold mineralisation along the strike and to
test recently identified soil anomalies. The drilling will be
converted to RC where ground conditions are not suitable. For
logistical reasons, drilling at Central Houndé will be conducted in
Q4 after the wet season finishes.
Pinarello & Konkolikan JV (Canyon Resources Limited) – 100%
interest
The air-core drilling programme started on the Western part of
the Tangolobé target in June 2018 and
was completed on 27th July. A total of 9,940 metres were drilled,
returning only one significant result (2m @ 1.11 from 36m
at Dafala).
Frontier JV (Metallor SA) – earning 100% through option
payments
No field work was conducted on the Frontier project in Q3. A
number of strong targets have already been identified and these
will be followed up in Q4 with 6,000 metres of air-core
drilling.
Mali
Due to the early onset of the rainy season during Q3, only
limited field work could be conducted on 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
A drilling programme that started in mid-June had to be stopped
in early July due to the onset of the rainy season. Only 2730
metres of a total planned 5000 metres could be drilled during the
quarter with the remainder scheduled for drilling after the rainy
seasons during Q4. Boubou JV (Mande Empire) – earning 100% through
option payments
No fieldwork was carried out during Q3.The results of a regional
soil sampling survey have been received. Two strong NE striking
soil anomalies of > 80 ppb Au, supported by As assays were
observed. The anomalies have a strike extent in excess of 1 km.
Infill sampling and mapping is planned during Q4.
Gourbassi Est – 100% Acacia (ABG Exploration Mali SARL)
No fieldwork was carried out during Q3. All outstanding soil
assay results were received during the period and a strong >80
ppm Au, NNE striking, soil anomaly was identified in the western
portion of the tenement. The soil anomaly has a strike length of
approximately 3km. Multi element analysis and detailed mapping is
planned for Q4.
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$000) |
Three months ended 30 September |
|
Nine months ended 30 September |
| (Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
| Gold revenue |
164,578 |
169,828 |
|
496,243 |
555,687 |
| Add: Realised gold
hedge gains |
- |
- |
|
1,662 |
- |
| Net gold
revenue |
164,578 |
169,828 |
|
497,905 |
555,687 |
| Gold sold
(ounces) |
135,875 |
132,787 |
|
386,920 |
445,225 |
| Net average
realised gold price (US$/ounce) |
1,211 |
1,279 |
|
1,287 |
1,248 |
|
|
|
|
|
|
|
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 September |
|
Nine months ended 30 September |
| (Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
| Cost of
Sales |
|
|
|
|
|
| Direct mining
costs |
79,230 |
68,508 |
|
229,383 |
228,818 |
| Third party smelting
and refining fees |
313 |
1,498 |
|
2,340 |
8,236 |
| Realised gains on
economic hedges |
(77) |
337 |
|
(315) |
615 |
| Realised gains on gold
hedges |
- |
- |
|
(1,662) |
- |
| Royalty expense |
12,676 |
12,213 |
|
38,375 |
30,895 |
| Depreciation and
amortisation* |
20,977 |
22,982 |
|
66,224 |
80,941 |
| Total |
113,119 |
105,538 |
|
334,345 |
349,505 |
|
|
|
|
|
|
| Total cost of
sales |
113,119 |
105,538 |
|
334,345 |
349,505 |
| Deduct: Depreciation
and amortisation* |
(20,977) |
(22,982) |
|
(66,224) |
(80,941) |
| Add: Realised gains on
gold hedges |
- |
- |
|
1,662 |
- |
| Deduct: Co-product
revenue |
(1,064) |
(774) |
|
(2,781) |
(6,579) |
| Total cash
cost |
91,078 |
81,782 |
|
267,002 |
261,985 |
|
|
|
|
|
|
| Total ounces sold |
135,875 |
132,787 |
|
386,920 |
445,225 |
| Total cash cost per
ounce sold |
670 |
616 |
|
690 |
588 |
* 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 September 2018 |
|
Three months ended 30 September 2017 |
| (US$/oz sold) |
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
| Cash cost per ounce
sold |
564 |
572 |
950 |
670 |
|
863 |
550 |
564 |
616 |
|
| Corporate
administration |
39 |
34 |
29 |
47 |
|
60 |
28 |
50 |
51 |
|
| Share based
payments |
(12) |
1 |
1 |
1 |
|
(8) |
(2) |
(3) |
(5) |
|
| Rehabilitation |
27 |
5 |
7 |
7 |
|
21 |
11 |
6 |
12 |
|
| CSR expenses |
62 |
7 |
11 |
16 |
|
10 |
17 |
8 |
16 |
|
| Capitalised
development |
- |
126 |
- |
83 |
|
310 |
194 |
- |
170 |
|
| Sustaining
capital |
47 |
69 |
20 |
56 |
|
109 |
66 |
70 |
79 |
|
| Total AISC |
727 |
814 |
1,018 |
880 |
|
1,365 |
864 |
695 |
939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* The group total includes a cost of
US$19/oz in Q3 2018 mainly related to
corporate costs incurred, and a cost of US$16/oz in Q3 2017.
|
(Unaudited) |
Nine months ended 30 September 2018 |
|
Nine months ended 30 September 2017 |
| (US$/oz sold) |
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
| Cash cost per ounce
sold |
617 |
582 |
960 |
690 |
|
812 |
473 |
647 |
588 |
|
| Corporate
administration |
42 |
36 |
31 |
46 |
|
42 |
25 |
49 |
43 |
|
| Share based
payments |
(18) |
(1) |
(2) |
(3) |
|
(5) |
(2) |
(5) |
(19) |
|
| Rehabilitation |
28 |
7 |
7 |
8 |
|
17 |
11 |
6 |
11 |
|
| CSR expenses |
37 |
8 |
9 |
13 |
|
9 |
10 |
8 |
13 |
|
| Capitalised
development |
8 |
158 |
- |
102 |
|
365 |
189 |
- |
195 |
|
| Sustaining
capital |
78 |
81 |
26 |
66 |
|
106 |
68 |
37 |
76 |
|
| Total AISC |
792 |
871 |
1,031 |
922 |
|
1,346 |
774 |
742 |
907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* The group total includes a cost of
US$13/oz in YTD 2018 mainly related
to corporate costs incurred, and a cost of US$1/oz for YTD 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 September |
|
Nine months ended 30 September |
| (Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
| Net profit for the
period |
11,850 |
16,038 |
|
42,727 |
78,581 |
| Plus: income tax
expense |
9,797 |
8,561 |
|
35,577 |
45,563 |
| Plus: depreciation and
amortisation1 |
20,977 |
22,982 |
|
66,224 |
80,941 |
| Plus: impairment
charges |
- |
- |
|
24,234 |
- |
| Plus: finance
expense |
2,172 |
2,982 |
|
10,412 |
8,436 |
| Less: finance
income |
(234) |
(261) |
|
(1,042) |
(1,804) |
| EBITDA |
44,562 |
50,302 |
|
178,132 |
211,717 |
| Adjusted for: |
|
|
|
|
|
| Restructuring
costs |
- |
15,399 |
|
- |
18,703 |
| Gain on sale of
non-core mineral royalty |
- |
- |
|
(45,000) |
- |
| One off legal
settlements2 |
- |
3,583 |
|
3,030 |
5,083 |
| Reduced operational
costs3 |
- |
7,411 |
|
- |
7,411 |
| Adjusted
EBITDA |
44,562 |
76,695 |
|
136,162 |
242,914 |
1 Depreciation and amortisation includes the depreciation
component of the cost of inventory sold.
2 Once-off legal settlements relate to the North Mara royalty
settlement.
3 Reduced operational costs for Q3 2017 relate primarily to
once-off contractor exit costs and inventory write-downs incurred
as part of the Bulyanhulu reduced operations programme.
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 September |
|
Nine months ended 30 September |
|
| (Unaudited) |
2018 |
2017 |
|
2018 |
2017 |
| Net profit for the
period |
11,850 |
16,038 |
|
42,727 |
78,581 |
| Adjusted for: |
|
|
|
|
|
| Gain on sale of
non-core mineral royalty |
- |
- |
|
(45,000) |
- |
| Restructuring
cost |
- |
15,399 |
|
- |
18,703 |
| Impairment
charges1 |
- |
- |
|
24,234 |
- |
| Once-off legal
settlements2 |
- |
3,583 |
|
3,030 |
5,083 |
| Reduced operational
costs3 |
- |
7,411 |
|
- |
7,411 |
| Tax impact of the
above |
- |
(7,918) |
|
378 |
(9,359) |
| Adjusted net
earnings |
11,850 |
34,513 |
|
25,369 |
100,419 |
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.
3 Reduced operational costs for Q3 2017 relate primarily to
once-off contractor exit costs and inventory write-downs incurred
as part of the Bulyanhulu reduced operations programme.
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.