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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Acacia Mining Plc | LSE:ACA | London | Ordinary Share | GB00B61D2N63 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 234.00 | 234.60 | 235.40 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMACA
21 October 2016
Results for the three months ended 30 September 2016 (Unaudited)
Based on IFRS and expressed in US Dollars (US$)
Acacia Mining plc ("Acacia") reports third quarter results
"Our strong third quarter operational and financial results represent another
significant step forward for Acacia, particularly considering some of the
headwinds experienced during the quarter", said Brad Gordon, Chief Executive
Officer. "I am particularly pleased with North Mara's performance this quarter,
delivering 112,523 ounces at an all-in sustaining cost ("AISC") of US$655 per
ounce sold. This more than offset the impact of operational stoppages at
Bulyanhulu and the deferred access to higher grades at Buzwagi. Group all-in
sustaining cost for the quarter of US$998 per ounce, including a US$97 per
ounce of share based valuation charges, was 16% lower than Q3 2015. We have
also increased our net cash position by a further US$32 million to US$203
million, which means we have close to doubled our net cash already in 2016. Due
to continued strong performance year to date, we now expect full year group
production to be around 5% higher than the top of our initial guidance range of
750 - 780,000 ounces of gold."
Operational Highlights
* Gold production of 204,726 ounces, 25% higher than Q3 2015
* Gold sales of 206,488 ounces, 24% higher than Q3 2015, and 1% above
production
* AISC1 of US$998 per ounce sold (US$901 per ounce before the impact of the
share based payment valuation charge), 16% below Q3 2015
* Cash costs1 of US$598 per ounce sold, 26% lower than Q3 2015
* Secured 100% ownership of the highly prospective West Kenya Project, which
continues to deliver positive drill results
Financial Highlights
* Revenue of US$285 million, 48% higher than Q3 2015, driven by increased
gold sales and higher net realised gold price1
* EBITDA1 of US$125 million, US$104 million higher than Q3 2015, despite
share based valuation charges of US$20 million
* Net earnings of US$53 million, (US12.9 cents per share), despite US$20
million of share based valuation charges
* Adjusted net earnings1 of US$51 million (US12.4 cents per share), US$64
million higher than Q3 2015
* Operational cash flow of US$100 million, US$96 million higher than Q3 2015
* Capital expenditure2 of US$53 million, 2% higher than Q3 2015 due to a
focus on capitalised development at Bulyanhulu and North Mara
* Net cash1 position increased by US$32 million during the quarter to US$203
million, almost doubling year to date, with the cash balance increasing to
US$302 million
Three months ended 30 Nine months ended 30
September September
(Unaudited) 2016 2015 2016 2015
Gold production (ounces) 204,726 163,888 616,751 531,189
Gold sold (ounces) 206,488 167,116 607,451 522,586
Cash cost (US$/ounce)1 598 807 626 789
AISC (US$/ounce)1 998 1,195 961 1,153
Net average realised gold price 1,330 1,113 1,250 1,172
(US$/ounce)1
(in US$'000)
Revenue 284,695 192,682 789,642 639,463
EBITDA 1 124,825 20,453 309,707 117,341
Adjusted EBITDA1 122,125 20,438 302,624 121,750
Net earnings/(loss) 52,787 (13,053) 46,659 1,712
Basic earnings/(loss) per share 12.9 (3.2) 11.4 0.4
(EPS) (cents)
Adjusted net earnings/(loss)1 50,898 (13,063) 109,665 4,798
Adjusted earnings/(loss) per 12.4 (3.2) 26.8 1.2
share (AEPS) (cents)1
Cash generated from operating 99,947 4,262 257,043 111,355
activities
Capital expenditure2 52,900 51,646 138,072 140,686
Cash balance 302,061 226,373 302,061
226,373
Total borrowings 99,400 127,800 99,400 127,800
1 These are non-IFRS measures. Refer to page 13 for definitions
2 Excludes non-cash capital adjustments (reclamation asset adjustments) and
includes finance lease purchases and land purchases recognised as long term
prepayments
Other Developments
Outlook
Due to continued strong performance year to date, we now expect full year group
production to be around 5% higher than the top of our initial guidance range of
750-780,000 ounces of gold. We expect our reported AISC to be towards the
bottom of our original guidance range of US$950 - US$980 per ounce, although
this includes an estimated US$50 per ounce in share based payment costs as a
result of the strength of our share price so far this year. In the fourth
quarter we expect production at Bulyanhulu and Buzwagi to increase over Q3 2016
with North Mara expected to deliver a material, albeit lower contribution in Q4
2016 due to a reduction in underground mine grade as we move through some lower
grade stopes.
Consolidation of ownership of Lonmin Joint Venture in West Kenya
As previously reported, Acacia has increased its ownership from 51% to 100% in
the two licences covering the majority of the West Kenya project area for
consideration of US$5 million. Acacia now has full exposure to a highly
prospective land package in Kenya, including our most advanced project, the
Liranda Corridor. Acacia continues to intersect high grade gold zones at the
Bushiangala and Acacia prospects along the Liranda Corridor where drilling is
indicating the potential for a new gold camp. As a result we opted to increase
our position in the project at this stage to ensure our shareholders will be
able to fully benefit if the project continues to progress.
Dividend Withholding Tax Appeal
As previously reported, the Tanzanian Revenue Authority (TRA) has raised claims
to the value of US$41.3 million for withholding tax on historic offshore
dividend payments paid by Acacia Mining plc to its shareholders. Acacia does
not believe that this claim has any merit. On 31 March 2016, the Tax Revenue
Appeals Tribunal found in favour of the TRA and Acacia appealed the judgement
to the Court of Appeal. On 3 October 2016 local news reports incorrectly stated
that the Court of Appeal had upheld the ruling of the Tanzania Revenue Appeals
Tribunal.
At this stage, the Court of Appeal has made no findings with respect to the
claim for withholding tax, and rather dismissed Acacia's initial appeal on
procedural matters. Acacia has obtained leave to lodge a corrected appeal
against the claim, which will be heard at the Court of Appeal in due course.
Corporate Taxation update
Following the Memorandum of Understanding ("MOU") entered into with the TRA in
Q1 2016 to prepay corporate tax up to US$20 million for the year, we have made
another payment of US$5.2 million during Q3 2016, bringing the year to date
pre-payment to US$15.2 million. All of the pre-payments to date have been fully
offset against current indirect tax receivables.
In addition, we have also made our first provisional corporate tax payment for
2016. This payment amounted to US$10.2 million and was calculated on three
quarters of the expected income tax payable for North Mara for 2016, in excess
of the US$20 million prepayment. The US$10.2 million was offset against the
long term indirect tax receivable, in line with the Memorandum of Settlement
("MOS") reached with the TRA in 2011, and as such there was no cash impact.
Together with the prepayment of corporate tax, this brings our total
year-to-date corporate tax payment to US$25.4 million.
Indirect taxes
During the third quarter, the total indirect tax receivables increased from
US$109.1 million at 30 June 2016 to US$124.1 million at 30 September 2016. This
increase was made up of a net increase in short term indirect tax receivables
of US$25.0 million, offset by a decrease in long term receivables of US$10.0
million.
The net increase in the short term receivable of US$25.0 million is mainly
driven by indirect tax payments of US$30.7 million during the quarter,
partially offset by the corporate tax prepayment of US$5.2 million and refunds
received of US$1.4 million. The net decrease in the long term receivable of
US$10.0 million relates mainly to the offsetting of the provisional corporate
tax payment of US$10.2 million, in line with the MOS.
Share based payments
As previously communicated, in order to align employee remuneration with long
term value creation for shareholders, certain employees are granted long term
incentives as part of their annual pay package. Due to the level of free float,
these awards are primarily in the form of restricted share units (RSUs) which
vest after a three year period and are cash settled. As the awards are cash
settled they are marked to market each quarter against the share price. There
are approximately 9 million units in issue, with around two thirds of these
linked to performance of the share price against a peer group of gold companies
(PRSUs) and as such can vest between zero and 200% of the initial grant amount
depending on share price performance compared to those peers.
These units are generally awarded and consequently vest in the first quarter of
the year, but are also occasionally awarded on the appointment of senior
employees out of this timeline. In Q3 2016, approximately 935,000 performance
units vested and due to the very strong absolute and relative performance of
the share price over the past three years, vested at 200% of the original
grant, resulting in a vesting amount paid of US$17.7 million. A further 1.0
million PRSUs and 0.8 million RSUs are due to vest in Q4 2016, with the PRSUs
also currently at 200% performance. During the quarter, we have incurred a
non-cash charge of US$20.1 million relating to the revaluation of the future
share based payments.
Key statistics
Three months ended 30 Nine months ended 30
September September
(Unaudited) 2016 2015 2016 2015
Tonnes mined (thousands of 9,501 10,787 28,847 31,262
tonnes)
Ore tonnes mined (thousands of 2,146 2,584 6,835 7,489
tonnes)
Ore tonnes processed 2,351 2,296 7,251 6,855
(thousands of tonnes)
Process recovery rate 87.5% 85.7% 88.4% 87.3%
(percent)4
Head grade (grams per tonne)4 3.1 2.6 3.0 2.8
Gold production (ounces) 204,726 163,888 616,751 531,189
Gold sold (ounces) 206,488 167,116 607,451 522,586
Copper production (thousands 3,557 2,993 11,984 10,485
of pounds)
Copper sold (thousands of 3,277 2,770 11,361 9,598
pounds)
Cash cost per tonne milled 53 59 52 60
(US$/t)1,3
Per ounce data
Average spot gold price2 1,335 1,124 1,260 1,178
Net average realised gold 1,330 1,113 1,250 1,172
price1
Total cash cost1 598 807 626 789
All-in sustaining cost1 998 1,195 961 1,153
Average realised copper price 2.17 2.04 2.14 2.45
(US$/lb)
Financial results
Three months ended 30 Nine months ended 30
September September
(Unaudited, in US$'000 unless 2016 2015 2016 2015
otherwise stated)
Revenue 284,695 192,682 789,642 639,463
Cost of sales (175,327) (173,711) (530,766) (537,293)
Gross profit 109,368 18,971 258,876 102,170
Corporate administration (5,906) (8,857) (15,677) (27,147)
Share-based payments (20,089) 2,469 (39,724) (5,821)
Exploration and evaluation costs (5,540) (6,017) (16,690) (14,753)
Corporate social responsibility (2,983) (4,230) (7,597) (9,534)
expenses
Other income/ (charges) 8,273 (14,102) 10,441 (25,907)
Profit/(loss) before net finance 83,123 (11,766) 189,629 19,008
expense and taxation
Finance income 657 426 1,147 1,126
Finance expense (3,023) (3,253) (8,403) (9,729)
Profit/(loss) before taxation 80,757 (14,593) 182,373 10,405
Tax (expense)/credit (27,970) 1,540 (135,714) (8,693)
Net profit/(loss) for the period 52,787 (13,053) 46,659 1,712
1 These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to "Non IFRS measures" on page 13 for definitions.
2 Reflect the London PM fix price.
3 Cash cost per tonne milled excluding the reprocessing of tailings at
Bulyanhulu amounted to US$61 per tonne for the quarter ended 30 September 2016,
US$69 per tonne for the quarter ended 30 September 2015, US$60 per tonne for
the nine months ended 30 September 2016 and US$68 per tonne for the nine months
ended 30 September 2015.
4 Reported process recovery rates and head grade include tailings retreatment
at Bulyanhulu. Excluding the impact of the tailings retreatment Q3 2016 process
recovery would be 91.5% with head grade being 3.4g/t, in Q3 2015 process
recovery would be 89.4% with head grade being 2.9g/t, nine months ended 30
September 2016 process recovery would be 92.2% with head grade being 3.3g/t and
nine months ended 30 September 2015 process recovery would be 89.4% with head
grade being 3.0g/t.
For further information, please visit our website: http://www.acaciamining.com/
or contact:
Acacia Mining plc +44 (0) 207 129 7150
Brad Gordon, Chief Executive Officer
Andrew Wray, Chief Financial Officer
Giles Blackham, Investor Relations Manager
Bell Pottinger +44 (0) 203 772 2500
Daniel Thöle
About Acacia Mining plc
Acacia Mining plc (LSE:ACA) is Tanzania's largest gold miner and one of the
largest producers of gold in Africa. We have three producing mines, all located
in north-west Tanzania: Bulyanhulu, Buzwagi, and North Mara and a portfolio of
exploration projects in Tanzania, Kenya, Burkina Faso and Mali.
Our approach is focused on strengthening our core pillars; our business, our
people and our relationships, whilst continuing to invest in our future.
Acacia is a UK public company headquartered in London. We are listed on the
Main Market of the London Stock Exchange with a secondary listing on the Dar es
Salaam Stock Exchange. Barrick Gold Corporation is our majority shareholder.
Acacia reports in US dollars and in accordance with IFRS as adopted by the
European Union, unless otherwise stated in this report.
Conference call
A conference call will be held for analysts and investors on 21 October 2016 at
09:00 London time.
The access details for the conference call are as follows:
Participant +44 20 3003 2666 / +1 212 999 6659
dial in:
Password: Acacia
A recording of the conference call will be available on our website http://
www.acaciamining.com/ after the call.
FORWARD- LOOKING STATEMENTS
This report includes "forward-looking statements" that express or imply
expectations of future events or results. Forward-looking statements are
statements that are not historical facts. These statements include, without
limitation, financial projections and estimates and their underlying
assumptions, statements regarding plans, objectives and expectations with
respect to future production, operations, costs, projects, and statements
regarding future performance. Forward-looking statements are generally
identified by the words "plans," "expects," "anticipates," "believes,"
"intends," "estimates" and other similar expressions.
All forward-looking statements involve a number of risks, uncertainties and
other factors, many of which are beyond the control of Acacia, which could
cause actual results and developments to differ materially from those expressed
in, or implied by, the forward-looking statements contained in this report.
Factors that could cause or contribute to differences between the actual
results, performance and achievements of Acacia include, but are not limited
to, changes or developments in political, economic or business conditions or
national or local legislation or regulation in countries in which Acacia
conducts - or may in the future conduct - business, industry trends,
competition, fluctuations in the spot and forward price of gold or certain
other commodity prices (such as copper and diesel), currency fluctuations
(including the US dollar, South African rand, Kenyan shilling and Tanzanian
shilling exchange rates), Acacia's ability to successfully integrate
acquisitions, Acacia's ability to recover its reserves or develop new reserves,
including its ability to convert its resources into reserves and its mineral
potential into resources or reserves, and to process its mineral reserves
successfully and in a timely manner, Acacia's ability to complete land
acquisitions required to support its mining activities, operational or
technical difficulties which may occur in the context of mining activities,
delays and technical challenges associated with the completion of projects,
risk of trespass, theft and vandalism, changes in Acacia's business strategy
including, the ongoing implementation of operational reviews, as well as risks
and hazards associated with the business of mineral exploration, development,
mining and production and risks and factors affecting the gold mining industry
in general. Although Acacia's management believes that the expectations
reflected in such forward-looking statements are reasonable, Acacia cannot give
assurances that such statements will prove to be correct. Accordingly,
investors should not place reliance on forward-looking statements contained in
this report.
Any forward-looking statements in this report only reflect information
available at the time of preparation. Subject to the requirements of the Market
Abuse Regulation or 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.
Third Quarter Review
Third quarter production of 204,726 ounces was an increase of 25% on Q3 2015.
AISC of US$998 per ounce sold was 16% lower than the prior year period of
US$1,195, and included a US$97 per ounce impact from the revaluation of future
share based payments. Cash costs reduced by 26% to US$598 per ounce sold.
Increased production drove a 24% increase in sales volumes to 206,488 ounces.
North Mara's production of 112,523 ounces was 66% higher than the prior year
driven by a 64% increase in head grade and a 5% improvement in recovery rates.
The increase in head grade was driven by higher mine grades in the Gokona
underground, primarily due to continued positive grade reconciliations. AISC
fell by 30% to US$655 per ounce sold predominantly due to lower cash costs in
combination with the higher production base.
Bulyanhulu saw a 16% decrease in production to 52,504 ounces. As previously
reported, this was mainly due to inconsistent process plant operations
resulting from the overheating of the ball mill trunnion bearing after a
planned two week shut down for scheduled maintenance, which resulted in a
further 14 days of mill downtime. Ounces produced from reprocessed tailings
increased by 20% from Q3 2015 due to a 25% increase in head grade. AISC was
elevated at US$1,300 per ounce due to the lower than planned production base,
but this still represented a 5% improvement on Q3 2015.
At Buzwagi, gold production for the quarter of 39,699 ounces was below plan,
but 17% higher than Q3 2015, due to a 13% improvement in mill throughput as a
result of improved mill availabilities. The higher production base and lower
cash costs drove a 23% decrease in AISC to US$1,076 per ounce sold in Q3 2015.
Total tonnes mined in Q3 2016 amounted to 9.5 million tonnes, 12% lower than Q3
2015 primarily due to lower open pit tonnes mined at Buzwagi as a result of
lower equipment availabilities and productivities. Ore tonnes mined were 2.1
million tonnes, 17% below Q3 2015, as the slower than planned movement of waste
at Buzwagi impacted on the timing of exposure of ore blocks.
Ore tonnes processed amounted to 2.4 million tonnes, in line with Q3 2015 of
2.3 million tonnes. Lower ore tonnes milled at Bulyanhulu due to the plant shut
down were offset by higher ore tonnes processed at Buzwagi as a result of good
mill performance.
Head grade for the quarter of 3.1 g/t was 19% higher than Q3 2015 of 2.6 g/t.
This was due to a 64% increase in head grade at North Mara driven by higher
grade underground Gokona ore processed, a 13% increase at Bulyanhulu due to
increased underground grades and a 25% increase in head grade for reprocessed
tailings at Bulyanhulu.
Cash costs for the quarter were 26% lower than in Q3 2015, and amounted to
US$598 per ounce sold. The decrease was primarily due to:
* Higher production base (US$140/oz);
* Increased capitalisation of operating costs at North Mara and Bulyanhulu
(US$50/oz);
* Lower labour costs at all sites primarily due to a reduction in employees
(US$19/oz);
* Higher co-product revenue due to increased copper sales volumes and a
higher realised copper price (US$11/oz).
This was partially offset by:
* Higher sales related costs due to higher sales volumes and the impact of
the increased gold price on royalties (US$25/oz).
The all-in sustaining cost of US$998 per ounce sold for the quarter was 16%
lower than Q3 2015 mainly due to the lower cash costs, the impact of the higher
production base, lower corporate administration expenditure and lower
sustaining capital expenditure. This was partly offset by the non-cash charge
relating to the revaluation of future share based payments amounting to US$20.1
million following the increase in Acacia's share price over the quarter and the
impact of units vesting the quarter, as well as an increase in performance
against peers (US$97/oz).
Cash generated from operating activities amounted to US$99.9 million for the
quarter, driven mainly by the higher EBITDA as higher sales volumes and the
higher realised gold prices aided revenue, combined with lower cash costs.
Net average realised gold price, being the average realised gold price achieved
by the Group and adjusted for realised losses relating to zero-cost collar gold
contracts, of US$1,330 per ounce was US$5 per ounce below the average market
price of US$1,335 per ounce, driven by the impact of realised losses on zero
cost collar contracts relating to gold at Buzwagi.
Capital expenditure amounted to US$52.9 million in Q3 2016 compared to US$51.6
million in Q3 2015. Capital expenditure primarily comprised capitalised
development expenditure (US$41.3 million), investment in underground
infrastructure at Bulyanhulu (US$3.2 million), investments in tailings and
infrastructure (US$3.1 million), investment in mobile equipment and component
change-outs (US$2.3 million) and land purchases at North Mara (US$0.2 million).
Mine Site Review
Bulyanhulu
Key statistics
Three months ended Nine months ended 30
30 September September
(Unaudited) 2016 2015 2016 2015
Key operational information:
Ounces produced oz 52,504 62,188 209,573 195,329
Ounces sold oz 53,764 64,132 204,483 186,108
Cash cost per ounce sold1 US$/oz 808 836 700 859
AISC per ounce sold1 US$/oz 1,300 1,373 1,057 1,362
Copper production Klbs 1,157 1,465 4,684 4,534
Copper sold Klbs 1,107 1,327 4,261 3,865
Run-of-mine:
Underground ore tonnes hoisted Kt 186 237 665 701
Ore milled Kt 168 236 670 715
Head grade g/t 9.4 8.3 9.3 8.5
Mill recovery % 85.9% 87.8% 91.3% 88.4%
Ounces produced oz 43,661 54,804 183,744 173,170
Cash cost per tonne milled1,2 US$/t 228 208 192 205
Reprocessed tailings:
Ore milled Kt 419 408 1,199 988
Head grade g/t 1.5 1.2 1.5 1.2
Mill recovery % 44.3% 45.4% 45.3% 56.6%
Ounces produced oz 8,843 7,384 25,829 22,159
Capital Expenditure
- Sustaining capital US$('000) 4,892 15,779 16,398 32,234
- Capitalised development US$('000) 18,648 14,227 47,086 48,267
- Expansionary capital US$('000) 321 (282) 1,074 (1,191)
23,861 29,724 64,558 79,310
- Non-cash reclamation asset US$('000) (3,062) (1,381) 6,875 (1,788)
adjustments
Total capital expenditure US$('000) 20,799 28,343 71,433 77,522
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to 'Non-IFRS measures" on page 13 for definitions.
2 Cash cost per tonne milled is calculated for Bulyanhulu excluding the impact,
and associated cash costs, of reprocessed tailings tonnes.
Operating performance
Gold production for the quarter of 52,504 ounces was 16% lower than Q3 2015.
This was due to ounces produced from underground mining decreasing by 20%
compared to Q3 2015. During the quarter we undertook a planned two-week
shutdown of the vertical shaft to refurbish and modernise the production and
service winders. In parallel with this, we undertook a programme of works on
the process plant over a similar time frame. The planned shaft maintenance was
concluded successfully and we recommenced full scale hoisting in early
September. However, due to repeated overheating of the ball mill trunnion
bearing the plant was unable to run consistently until the final week of the
quarter which impacted on both throughput and recoveries. The overheating was
due to flex in the trunnion footplate, which led to increased friction on the
bearing. The issue was resolved by stabilising and reinforcing the base of the
footplate and the plant has been operating normally since restarting. Further
work will be carried out during a planned plant shutdown in Q4 2016 with a full
bearing housing replacement to be installed during 2017 to provide a life of
mine solution.
As a result of the shutdown there was a 29% decrease in throughput and a 2.2%
reduction in recovery rates compared to Q3 2015 which was partly offset by a
13% increase in head grade as underground mined grades improved. Ounces
produced from reprocessing of tailings increased by 20% from Q3 2015 due to a
25% increase in head grade. Gold sold for the quarter amounted to 53,764
ounces, 16% lower than Q3 2015, in line with production. Copper production of
1.2 million pounds for the quarter was 21% lower than in Q3 2015 due to the
plant shut down.
Cash costs for the quarter of US$808 per ounce sold were 3% lower than Q3 2015
(US$836). This was despite the lower production base and mainly due to lower
labour costs driven by lower employee headcount, higher capitalised mining
costs as a result of higher waste capitalisation ratios, and lower general and
administrative expenditure, partly offset by higher energy and fuel costs as a
result of increased self-generation to provide stable power to the plant.
AISC per ounce sold for the quarter of US$1,300 was 5% lower than Q3 2015
(US$1,373) driven by the lower cash costs, lower sustaining capital expenditure
and lower corporate administration expenditure, predominantly offset by the
impact of the lower production base and higher capitalised underground
development.
Capital expenditure for the quarter before reclamation adjustments amounted to
US$23.9 million, 20% lower than the Q3 2015 expenditure of US$29.7 million,
mainly driven by lower sustaining capital spend, partly offset by higher
capitalised underground development costs. Capital expenditure consisted mainly
of capitalised underground development costs (US$18.6 million), underground
mine infrastructure (US$3.2 million), investments in tailings and
infrastructure (US$1.4 million) and investment in mobile equipment and
component change-outs (US$0.4 million).
Buzwagi
Key statistics
Three months ended 30 Nine months ended 30
September September
(Unaudited) 2016 2015 2016 2015
Key operational information:
Ounces produced oz 39,699 33,961 119,918 125,976
Ounces sold oz 39,284 33,590 119,688 125,078
Cash cost per ounce sold1 US$/oz 986 1,197 1,030 1,028
AISC per ounce sold1 US$/oz 1,076 1,394 1,108 1,171
Copper production Klbs 2,400 1,528 7,300 5,951
Copper sold Klbs 2,171 1,444 7,100 5,734
Mining information:
Tonnes mined Kt 5,072 6,523 16,495 19,416
Ore tonnes mined Kt 1,203 1,518 3,808 4,226
Processing information:
Ore milled Kt 1,063 938 3,245 3,025
Head grade g/t 1.2 1.2 1.2 1.4
Mill recovery % 94.4% 93.6% 94.5% 93.8%
Cash cost per tonne milled1 US$/t 36 43 38 42
Capital Expenditure
- Sustaining capital US$('000) 1,087 2,980 3,318 8,114
- Capitalised development US$('000) - 1,137 - 1,480
1,087 4,117 3,318 9,594
- Non-cash reclamation asset US$('000) (1,795) 1,577 1,212 1,493
adjustments
Total capital expenditure US$('000) (708) 5,694 4,530 11,087
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to "Non-IFRS measures" on page 13 for definitions.
Operating performance
Gold production for the quarter of 39,699 ounces was 17% higher than Q3 2015,
as a result of a 13% increase in plant throughput due to improved mill
availability leading to improved milling rates driven, but behind plan as a
result of delayed access to the high grades zones due to slower than planned
movement of waste material. Gold sold for the quarter amounted to 39,284
ounces, in line with production. Copper production of 2.4 million pounds for
the quarter was 57% higher than Q3 2015 due to higher throughput and higher
copper grades.
Total tonnes mined for the quarter of 5.1 million tonnes were 22% lower than Q3
2015 and ore tonnes mined of 1.2 million tonnes were 21% lower than Q3 2015 as
a result of lower equipment availabilities due to fleet reliability issues and
lower fleet productivities due to increased rill material encountered as the
mine moved below the Stage 2 final depth. The slower mining rates meant that
the accessing of the higher grade central zone will be deferred into the middle
of the fourth quarter and led to grades being in line with previous quarters.
Cash costs for the quarter of US$986 per ounce sold were 18% lower than in Q3
2015 (US$1,197). Cash costs were primarily impacted by the higher production
base, lower general and administrative costs, lower energy and fuel costs due
to improved reliance on the national electricity gridand lower labour costs
driven by a decrease in employees, partly offset by higher sales related costs
given higher sales volumes.
AISC per ounce sold for the quarter of US$1,076 was 23% lower than Q3 2015
(US$1,394). This was mainly driven by the lower cash costs as discussed above,
lower capital expenditures and a higher production base.
Capital expenditure for the quarter before reclamation adjustments of US$1.1
million was 74% lower than Q3 2015 (US$4.1 million). Sustaining capital
expenditure relates mainly to investments in tailings and infrastructure of
US$0.9 million.
We continue to assess options for the future of the mine and are assessing the
viability of extending the stage 3 operation by optimising the final pit shell
in order to extract additional ounces. This process is ongoing and once this is
completed and is Board approved we will provide a further update.
North Mara
Key statistics
Three months ended 30 Nine months ended 30
September September
(Unaudited) 2016 2015 2016 2015
Key operational information:
Ounces produced oz 112,523 67,738 287,260 209,884
Ounces sold oz 113,440 69,395 283,280 211,400
Cash cost per ounce sold1 US$/oz 364 591 402 585
AISC per ounce sold1 US$/oz 655 939 694 908
Open pit:
Tonnes mined Kt 4,140 3,922 11,374 10,977
Ore tonnes mined Kt 655 787 2,050 2,394
Mine grade g/t 2.0 2.3 1.9 2.6
Underground:
Ore tonnes trammed Kt 103 105 313 168
Mine grade g/t 23.1 6.7 15.6 5.8
Processing information:
Ore milled Kt 701 716 2,137 2,128
Head grade g/t 5.4 3.3 4.5 3.5
Mill recovery % 92.8% 88.7% 91.9% 87.8%
Cash cost per tonne milled1 US$/t 59 57 53 58
Capital Expenditure
- Sustaining capital2 US$('000) 4,497 4,707 14,578 13,727
- Capitalised development US$('000) 22,629 12,638 53,680 36,571
- Expansionary capital US$('000) 466 33 924 962
27,592 17,378 69,182 51,260
- Non-cash reclamation asset US$('000) (2,868) 2,476 3,384 2,270
adjustments
Total capital expenditure US$('000) 24,724 19,854 72,566 53,530
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to 'Non-IFRS measures" on page 13 for definitions.
2 Includes land purchases recognised as long term prepayments
Operating performance
North Mara's production of 112,523 ounces was 66% higher than Q3 2015, as a
result of a 64% increase in head grade due to the higher contribution from the
Gokona underground mine and a resultant 5% higher recovery rate. Underground
mining continued to be solely from the East Zone of the underground, where
positive grade reconciliations continued leading to mined grade during the
quarter averaging 23.1g/t. During the quarter, the opening of the West Portal
progressed well which will enable stoping to commence from the lower grade West
Zone in Q4.
Open pit mined grade decreased as a result of ore being solely sourced from the
lower grade Nyabirama pit following the end of mining in the Gokona open pit in
Q3 2015. Gold ounces sold for the quarter of 113,440 ounces were in line with
production.
Cash costs of US$364 per ounce sold were 38% lower than Q3 2015 (US$591) driven
primarily by the higher production base and higher capitalisation of operating
expenditure, partly offset by higher sales related costs given higher sales
volumes in combination with the impact of the higher gold price on royalties.
AISC per ounce sold for the quarter of US$655 was 30% lower than Q3 2015
(US$939) primarily due to the lower cash costs and the higher production base,
partly offset by higher capitalised development expenditure.
Capital expenditure for the quarter before reclamation adjustments of US$27.6
million was 59% higher than in Q3 2015 (US$17.4 million). Key capital
expenditure included capitalised stripping costs (US$16.9 million), capitalised
underground development costs (US$5.8 million), investment in mobile equipment
and component change-outs (US$1.9 million) and investment in tailings and
infrastructure (US$0.9 million). In addition, US$0.2 million was spent on land
acquisitions primarily around the Nyabirama open pit. Land acquisition costs
are included in capital expenditure above as they are included in AISC but are
treated as long term prepayments in the balance sheet.
Exploration Review
During the third quarter we continued to progress greenfield and brownfield
exploration programmes across nine projects in four countries. We have expensed
US$5.5 million on greenfield programmes in Kenya, Burkina Faso and Mali and
capitalised US$0.5 million of drilling on brownfield projects at North Mara and
Bulyanhulu in Tanzania during the quarter.
Tanzania
North Mara
Nyabirama Deeps
During Q3 2016, a total of five holes for 2,757 metres of diamond core (DD)
drilling were completed in order to test for high grade mineralisation below
the final Stage 4 Nyabirama open pit design. An additional three holes were
added into the initial eight hole programme based on positive results from
holes drilled during the quarter. A total of nine DD holes have been completed
to date totalling 5,300 metres.
The improved geological model developed over the past six to twelve months has
enabled better targeting of high grade mineralisation, with the current
drilling testing interpreted southwest plunging shoot controls. Assay results
received during the quarter included very encouraging results, consistent with
the interpreted geological model that there are three to four high grade zones
each 3m to 8m wide in the hanging wall and footwall positions. With the better
understanding of the plunge control to mineralisation, an additional ten DD
holes have been planned to further scope out the potential down plunge
extensions.
Bulyanhulu
Underground exploration and resource/reserve definition drilling at Bulyanhulu
has focused on the Reef 2 series of veins, targeting the Western Extensions and
Central Zone. Definition drilling on the Central Zone is being completed on
Reef 2m using a 50m x 50m staggered grid pattern and is showing good continuity
of widths and grades comparable to the original broader spaced surface
exploration holes, and may result in the zone being brought forward in the mine
plan. We are now stepping out the definition drilling in order to expand the
reserve in this area further.
The initial exploration drilling into the Western Extensions is being completed
on a 200m x 200m spaced grid pattern and is targeting the plunge and strike
extensions of the Central Zone approximately 1-2km west of current resources.
Results returned to date show that Reef 2i has the better grades and continuity
although results have been mixed. We have therefore commenced infill drilling
around some of the better intercepts to investigate the continuity of widths
and grades on both Reef 2i and 2m. In total 21,961 metres of underground
drilling have been completed on the extension drilling programme to date.
Nyanzaga
In September 2015, Acacia entered into an earn-in joint venture with OreCorp
Limited (ASX:ORR) to progress the Nyanzaga Project, whereby OreCorp took over
management of the project for a three year period. This structure allows the
project to be progressed whilst giving Acacia the optionality to maintain a 75%
stake in the project once it gets to a development decision.
OreCorp have continued to progress the project and during the quarter released
the positive results of a scoping study which outlined a combined open pit and
underground project that produces 2.4Moz Au over a 13 year life at an AISC of
US$798/oz and requires pre-production capital of US$248 million (inclusive of
contingency). The full study can be found on OreCorp's website, http://
www.orecorp.com.au/. Due to the positive results in the scoping study, OreCorp
have now commenced a pre-feasibility study into the project.
Kenya
West Kenya Project
During Q3 2016 we continued a diamond core drilling programme designed to
follow up on the positive results from the initial drilling programme on the
Liranda Corridor within the Kakamega Dome gold camp. We are more than 50%
through the planned programme of approximately 38,000 - 40,000 metres of
drilling to test the structural orientation and continuity of high grade gold
mineralisation encountered on the Acacia and Bushiangala Prospects. Six diamond
core rigs are now currently operating in order to complete the next stage of
drilling with positive results from drilling continuing and results during the
quarter including: 4m @ 15.6 g/t Au (Acacia), 2m @ 12.3 g/t (Acacia), 4m @ 10.3
g/t (Bushiangala). The programme, if successful, aims to allow for the
calculation of an initial inferred resource by end of Q1 2017.
In addition to the drilling, a 2,400 line kilometre helicopter electromagnetic
(HTEM) geophysical survey on 50 metre line spacing was completed across the
Liranda Corridor to assist with our geological and structural understanding of
the Camp and to enhance drill targeting.
Year to date, 36 diamond holes for 22,383 metres and 32 reverse circulation
("RC") holes for 4,359 metres have been completed. Diamond holes are being
drilled in 80m and 160m spaced grids across each structural zone. At the Acacia
Prospect drilling continues to intersect shear zone gold mineralisation hosted
associated with narrow quartz veins, sulphides (pyrite +/- pyrrhotite +/-
arsenopyrite, sphalerite +/- chalcopyrite +/- molybdenite) and sericite +/-
green mica +/- carbonate alteration. The main targets are interpreted to be
two northeast striking structural zones, AZ1 and AZ2. These structural zones
extend to 500 metres vertical and potentially much deeper. Drilling is
continuing to delineate the strike extent of each structural zone, with initial
indications that the shoots extend over 300-500 metres.
At the Bushiangala Prospect closer spaced drilling has confirmed high grade
zones of gold mineralisation within the BZ1 zone, although further drilling is
required to definitively tie down the geometry of this zone.
During the quarter, Acacia agreed to increase its ownership from 51% to 100% in
the two licences covering the majority of West Kenya project area by acquiring
the remaining stake held by a subsidiary of Lonmin plc ("Lonmin") for a
consideration of US$5 million.
Burkina Faso
Acacia continues to identify significant gold potential in the Houndé Belt
through on-going soil sampling programmes, airborne and ground based magnetic
and radiometric surveys, and first-pass reconnaissance Aircore and RC drilling
programmes. Multiple extensive (multi-kilometre) gold-in-soil anomalies have
been identified on all projects sampled to date. Additionally, we have
intersected early positive results from Aircore drilling on the Pinarello
Project and RC/DD drilling on the Central Houndé JV project. We continue to be
encouraged by prospecting and drilling on the South Houndé JV and have notified
our joint venture partner of our intent to take on management of this project
in January 2017 once we earn 50% equity in the project at the end of 2016.
Acacia now holds approximately 2,700 square kilometres of licences and
applications under joint ventures in the Houndé Belt. Drilling activities
during the quarter were limited by seasonal rains, however a detailed airborne
magnetic and radiometric survey comprising 17,560 line kilometres and covering
the Central Houndé, Pinarello, Konkolikan and Frontier joint venture project
areas was completed during the quarter to assist in targeting, prospect
evaluation and prioritisation.
South Houndé Joint Venture (Sarama Resources Limited) - earning 70%
At the South Houndé JV project we continued field-based exploration activities
focused both on resource extensions to the Tankoro Resource and regional
exploration programmes searching for new discoveries. During the quarter, a
total of 12 RC holes for 1,286 metres and 10 core holes for 3,800m metres were
completed on prospects along the Tankoro Corridor before the weather and access
issues due to seasonal rains suspended field based activities.
Drilling has returned a number of positive results across both the MC, MM and
the Phantom Est zones including 4.4m @ 4.54g/t Au in DDH044 (MM Zone) and 13.7m
@ 5.67g/t Au in DDH086 (MM Zone) from holes drilled to test for high grade
cross structures. These results are considered positive and support validity of
a predictive model for control to high grade mineralisation in cross
structures. Field work will recommence around mid-October after the cessation
of the wet season.
Central Houndé Joint Venture (Thor Explorations Limited) - earning 80%
At Central Houndé reconnaissance RC and DD drilling continued to evaluate the
Legue-Bongui structural corridor, coincident with an 8km x 3km long
gold-in-soil anomaly. The gold-in-soil anomaly is interpreted to be associated
with a volcano-sedimentary sequence that wraps around an internal granite
intrusion (the Legue Granite) creating a favourable litho-structural setting.
During Q3 2016, a total of 21 RC holes for 3,210 metres and 7 DD holes for
15,590 metres were drilled to test a small portion of the Legue-Bondi Corridor
before the commencement of the wet season. Results of this reconnaissance
drilling are considered encouraging, with 16 of the 21 RC holes drilled to-date
having returned gold anomalism. Results include: 6m @ 3.75g/t Au from 31m, 5m @
2.57g/t Au from 60m, 2m @ 28.17g/t Au from 155m, 12.0m @ 1.40g/t Au from 129m,
19m @ 1.02g/t Au from 156m, and 30m @ 0.45g/t Au from 93m. Although, DD holes
drilled to test the Legue artisanal workings returned only anomalous gold
values, they did identify a 20-30 metre wide carbonate-sericite-pyrite
alteration zone with quartz-carbonate stockwork veining associated with broad
low grade intercepts in a volcano-sedimentary sequence. Better results from the
DD drilling at Legue included 31.1m @ 0.48g/t Au from 82.4m and 15m @ 0.89g/t
Au from 84m. Both RC and core drilling will recommence as soon as access is
possible after the wet season.
Pinarello & Konkolikan Joint Venture (Canyon Resources Limited) - earning 75%
Regional reconnaissance surface soil sampling programmes have defined a number
of significant gold-in-soil anomalies on the property. Coincident chargeability
/resistivity/auger and soil geochemical targets along the corridor have been
targeted for follow up. A total of 78 AC holes for 5,286 metres were completed
primarily on the Tankoro South Structural Corridor (8km strike) before the
weather and access issues due to seasonal rains suspended field based
activities. Results are considered encouraging with in excess of 30% of holes
returning anomalous intercepts. Field programmes, including continuation of AC
drill programs, will commence as soon as access is possible after the wet
season.
Frontier Joint Venture (Metalor SARL) - option to earn 100%
In June 2016, Acacia entered into an agreement with a local Burkinabe company,
Metalor SA, the "Frontier Joint Venture", which includes two licences
immediately south of, and contiguous to, the Pinarello Project where soil
sampling has identified multiple kilometre scale gold-in-soil anomalies.
Historic reconnaissance soil sampling has already identified gold anomalism on
the Frontier JV properties associated with interpreted regional shear zones
along the contacts between granite intrusions and volcano-sedimentary
lithologies. We expect to commence regolith mapping and more detailed soil
sampling programmes in Q4 2016 following the wet season in order to fully
understand the regional potential of this project area.
Mali
Tintinba - Bane Project
The Tintinba-Bane Project consists of three permits covering approximately
150km2. These properties are located within the Kenieba Inlier region of
Western Mali, along the world- class Senegal-Mali-Shear-Zone (SMSZ), which
hosts more than 50 million ounces of gold endowment. We have defined five high
quality coincident structural-magnetic and surface geochemical gold targets
that are being tested by reconnaissance reverse circulation drilling. During
the quarter a total of four reverse circulation holes for 578m were drilled
before weather and access issues suspended drilling for the wet season.
Results are considered encouraging with mineralisation encountered in a number
of holes and are interpreted to be associated with veining and alteration close
to the contract between sediments and felsic intrusive units. 19 of the 28
holes drilled to date on two prospects returned anomalous intercepts. Results
include 23m @ 0.45g/t from 6m (including 7m @ 1.01g/t Au from 21m) and 13m @
1.11g/t Au from 29m. Field programmes including induced polarisation and RC
drilling will commence as soon as access is possible after the wet season.
Non-IFRS Measures
Acacia has identified certain measures in this report that are not measures
defined under IFRS. Non-IFRS financial measures disclosed by management are
provided as additional information to investors in order to provide them with
an alternative method for assessing Acacia's financial condition and operating
results. These measures are not in accordance with, or a substitute for, IFRS,
and may be different from or inconsistent with non-IFRS financial measures used
by other companies. These measures are explained further below.
Net average realised gold price per ounce sold is a non-IFRS financial measure
which excludes from gold revenue:
* Unrealised gains and losses on non-hedge derivative contracts; and
* Export duties
It also includes realised gains and losses on gold hedge contracts reported as
part of cost of sales.
Net average realised gold price per ounce sold have been calculated as follow:
(US$000) Three months ended 30 Nine months ended 30
September September
(Unaudited) 2016 2015 2016 2015
Gold revenue 275,897 186,075 760,511 612,624
Less: Realised gold hedge losses (1,331) - (1,331) -
Net gold revenue 274,566 186,075 759,180 612,624
Gold sold (ounces) 206,488 167,116 607,451 522,586
Net average realised gold price 1,330 1,113 1,250 1,172
(US$/ounce)
Cash cost per ounce sold is a non-IFRS financial measure. Cash costs include
all costs absorbed into inventory, as well as royalties, by-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.
The presentation of these statistics in this manner allows Acacia to monitor
and manage those factors that impact production costs on a monthly basis.
Acacia calculates cash costs based on its equity interest in production from
its mines. Cash costs per ounce sold are calculated by dividing the aggregate
of these costs by gold ounces sold. Cash costs and cash cost per ounce sold are
calculated on a consistent basis for the periods presented.
The table below provides a reconciliation between cost of sales and total cash
cost to calculate the cash cost per ounce sold.
Three months ended 30 Nine months ended 30
(US$'000) September September
(Unaudited) 2016 2015 2016 2015
Cost of Sales
Direct mining costs 111,649 124,879 346,085 388,558
Third party smelting and refining 5,589 4,906 19,228 14,394
fees
Realised losses on economic hedges 2,161 3,339 8,615 8,018
Realised losses on gold hedges 1,331 - 1,331 -
Royalty expense 12,895 8,368 35,429 27,990
Depreciation and amortisation* 41,702 32,219 120,078 98,333
Total cost of sales 175,327 173,711 530,766 537,293
Total cost of sales 175,327 173,711 530,766 537,293
Deduct: depreciation and (41,702) (32,219) (120,078) (98,333)
amortisation*
Deduct: realised losses on gold (1,331) - (1,331) -
hedges
Deduct: co-product revenue (8,798) (6,607) (29,131) (26,839)
Total cash cost 123,496 134,885 380,226 412,121
Total ounces sold 206,488 167,116 607,451 522,586
Cash cost per ounce 598 807 626 789
* Depreciation and amortisation includes the depreciation component of the cost
of inventory sold
All-in sustaining cost (AISC) is a non-IFRS financial measure. The measure is
in accordance with the World Gold Council's guidance issued in June 2013. It is
calculated by taking the aggregate of cash costs, corporate administration
costs, reclamation and remediation costs for operating mines, corporate social
responsibility expenses, mine exploration and study costs, capitalised
stripping and underground development costs and sustaining capital expenditure.
This is then divided by the total ounces sold. A reconciliation between cash
cost per ounce sold and AISC is presented below:
(Unaudited) Three months ended 30 September 2016 Three months ended 30 September
2015
(US$/oz sold) Bulyanhulu North Mara Buzwagi Group* Bulyanhulu North Buzwagi Group*
Mara
Cash cost per 808 364 986 598 836 591 1,197 807
ounce sold
Corporate 29 52 49 53 53
administration 30 20 29
Share-based 11 (3) (2) (3) (15)
payments 8 7 97
Rehabilitation 6 23 8 14
8 8 2 7
Mine exploration - - - - - - -
-
CSR expenses 20 14 27 16 25
8 17 14
Capitalised 347 199 200 222 182 34 168
development -
Sustaining 28 246 69 89 143
capital 91 40 53
Total 1,300 655 1,076 998 1,373 939 1,394 1,195
* The group total includes US$95/oz of unallocated corporate related costs in
Q3 2016, and a credit of US$2/oz in Q3 2015.
(Unaudited) Nine months ended 30 September 2016 Nine months ended 30 September
2015
(US$/oz sold) Bulyanhulu North Buzwagi Group* Bulyanhulu North Buzwagi Group*
Mara Mara
Cash cost per 700 402 1,030 626 859 585 1,028 789
ounce sold
Corporate 23 22 26 26 49 44 46 52
administration
Share-based 10 7 11 65 3 1 - 11
payments
Rehabilitation 7 9 3 7 6 24 7 14
Mine exploration - - - - - - - -
CSR expenses 6 14 11 13 12 16 14 18
Capitalised 230 189 - 166 259 173 12 165
development
Sustaining 81 51 27 58 174 65 64 104
capital
Total 1,057 694 1,108 961 1,362 908 1,171 1,153
* The group total includes US$63/oz of unallocated corporate related costs in
the nine months ended September 2016 (2015: US$20/oz).
AISC is intended to provide additional information for what the total
sustaining cost for each ounce sold is, taking into account expenditure
incurred in addition to direct mining costs, depreciation 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, by-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 costs per tonne milled are 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.
Adjusted EBITDA is a non-IFRS financial measure. It is calculated by excluding
one-off costs or credits relating to non-routine transactions from EBITDA. It
excludes other credits and charges that, individually or in aggregate, if of a
similar type, are of a nature or size that requires explanation in order to
provide additional insight into the underlying business performance. EBITDA is
adjusted for items (a) to (d) as contained in the reconciliation to adjusted
net earnings below.
EBIT is a non-IFRS financial measure and it reflects EBITDA adjusted for
depreciation and amortisation and goodwill impairment charges.
Adjusted net earnings is a non-IFRS financial measure. It is calculated by
excluding certain costs or credits relating to non-routine transactions from
net profit attributed to owners of the parent. It includes other credit and
charges that, individually or in aggregate, if of a similar type, are of a
nature or size that requires explanation in order to provide additional insight
into the underlying business performance.
Adjusted net earnings and adjusted earnings per share have been calculated by
excluding the following:
(US$000) Three months ended 30 Nine months ended 30
September September
(Unaudited) 2016 2015 2016 2015
Net (loss)/ earnings 52,787 (13,053) 46,659 1,712
Adjusted for:
Operational review costs (including 800 (15) 2,925 1,480
restructuring costs)(a)
Once off legal settlements(b) - - - 2,929
Insurance settlements(c) (3,500) - (3,500) -
Discounting of long term indirect tax - - (6,508) -
receivables(d)
Prior year tax positions recognised1 - - 69,916 -
Tax impact of the above 811 5 173 (1,323)
Adjusted net earnings 50,898 (13,063) 109,665 4,798
1 For the nine months ended 30 September 2016, US$69.9 million represents a
provision raised for the implied impact of an adverse tax ruling made by the
Tanzanian Court of Appeal with respect to historical tax assessments of
Bulyanhulu. As reported in Q1 2016, the impact of the ruling was calculated for
Bulyanhulu and extrapolated to North Mara and Tulawaka as well and covers
results up to the end of 2015. On a site basis, US$35.1 million was raised for
Bulyanhulu, US$30.4 million for North Mara and US$4.4 million for Tulawaka.
Adjusted net earnings per share is a non-IFRS financial measure and is
calculated by dividing adjusted net earnings by the weighted average number of
Ordinary Shares in issue.
Free cash flow is a non-IFRS measure and represents the change in cash and cash
equivalents in a given period.
Net cash is a non-IFRS measure. It is calculated by deducting total borrowings
from cash and cash equivalents.
Cash from sustaining operations is a non-IFRS financial measure and represents
the cash flow generated post the spend required to sustain the Group and its
operations. It is calculated as free cash flow adjusted for expansionary
capital expenditure, exploration, the cash flow associated with one-off type
items and other charges, and dividends.
Mining statistical information
The following describes certain line items used in the Acacia Group's
discussion of key performance indicators:
* Open pit material mined - measures in tonnes the total amount of open pit
ore and waste mined.
* Underground ore tonnes hoisted - measures in tonnes the total amount of
underground ore mined and hoisted.
* Underground ore tonnes trammed - measures in tonnes the total amount of
underground ore mined and trammed.
* Total tonnes mined includes open pit material plus underground ore tonnes
hoisted.
* Strip ratio - measures the ratio of waste?to?ore for open pit material
mined.
* Ore milled - measures in tonnes the amount of ore material processed
through the mill.
* Head grade - measures the metal content of mined ore going into a mill for
processing.
* Milled recovery - measures the proportion of valuable metal physically
recovered in the processing of ore. It is generally stated as a percentage
of the metal recovered compared to the total metal originally present.
END
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