ACACIA MINING PLC - 1st Quarter Results

20 April 2017

Results for the 3 months ended 31 March 2017 (Unaudited)

Based on IFRS and expressed in US Dollars (US$)

Acacia Mining plc (“Acacia’’) reports first quarter results

“At an operational level Acacia had a very strong start to the year, with production of 219,670 ounces delivered from our mines and the declaration of a 1.3Moz maiden high grade resource in Kenya”, said Brad Gordon, Chief Executive Officer. ”North Mara delivered strong production of 96,468 ounces, and it was pleasing to see the significant step up at Buzwagi to 59,856 ounces in the quarter whilst, as expected, Bulyanhulu had a slower start to the year with production of 63,346 ounces. All-in Sustaining Cost per ounce sold (AISC) was impacted by sales being almost 35,000 ounces lower than production primarily due to the restriction on the export of metallic mineral concentrates, but still amounted to US$934 per ounce sold (US$877 per ounce prior to the impact of share-based payment valuations), 3% lower than Q1 2016. As announced previously, we continue to engage with the Tanzanian Government in order to be able to resume the export of gold/copper concentrate which has been halted since 3^rd March and accounts for approximately 30% of group revenues. Whilst these engagements are ongoing our mines continue to operate as normal and are stockpiling the gold/copper concentrate that has been produced. As a result, at this stage there is no change to guidance for the year.”

Operational Highlights

• Gold production of 219,670 ounces, 15% higher than Q1 2016
• Gold sales of 184,744 ounces, in line with Q1 2016, but 34,926 ounces lower than production primarily as a result of the Tanzanian Government’s directive stopping the export of metallic mineral concentrate
• Cash cost¹ of US$577 per ounce sold,17% lower than Q1 2016
• AISC¹ of US$934 per ounce sold, 3% below Q1 2016, after a US$56 per ounce share-based payment valuation impact in Q1 2017
  • For reference purposes, if Q1 sales ounces equalled Q1 production, AISC would have been approximately US$852 per ounce
• Buzwagi delivered production of 59,856 ounces, up 61% compared to Q1 2016 with AISC decreasing to US$773 per ounce sold
• Maiden NI43-101 compliant Inferred Mineral Resource Estimate of 1.31 million ounces of gold at 12.1 grams per tonne declared on the Liranda Corridor within the West Kenya Project

Financial Highlights

• Revenue of US$234 million, 6% higher than Q1 2016, as increased production from North Mara and a 6% increase in gold price has offset the impact of lower revenue from gold/copper concentrate sales
• EBITDA¹ of US$82 million, 25% higher than Q1 2016, mainly due to slightly higher revenues and lower direct mining costs
• Net earnings¹ of US$27 million (US6.5 cents per share), up from a US$52 million loss in Q1 2016 and up 48% from Q1 2016 on an adjusted basis
• Declared first provisional corporate tax payment of US$8.7 million for Q1 2017 due to strong performance at North Mara

• Net cash decreased by US$22 million during Q1 2017 to US$196 million, due to sales lagging production and indirect tax outflows

	Three months ended 31 March			Year ended 31 Dec
(Unaudited)	2017	2016		2016
Gold production (ounces)	219,670	190,210		829,705
Gold sold (ounces)	184,744	184,181		816,743
Cash cost (US$/ounce)1	577	693		640
AISC (US$/ounce)1	934	959		958
Net average realised gold price (US$/ounce)1	1,221	1,150		1,240
(in US$'000)
Revenue	233,901	220,909		1,053,532
EBITDA 1	82,193	65,550		415,388
Adjusted EBITDA1	82,193	66,411		409,903
Net earnings/(loss)	26,827	(52,410)		94,944
Basic earnings/(loss) per share (EPS) (cents)	6.5	(12.8)		23.2
Adjusted net earnings1	26,827	18,109		161,021
Adjusted net earnings per share (AEPS) (cents)1	6.5	4.4		39.2
Cash generated from operating activities	25,224	52,232		317,976
Capital expenditure2	46,828	36,030		195,898
Cash balance	281,442	237,429		317,791
Total borrowings	85,200	113,600		99,400

   ¹ These are non-IFRS measures. Refer to page 15 for definitions   ² Excludes non-cash capital adjustments (reclamation asset adjustments) and include land purchases recognised as long term prepayments

Other Developments

Export of metallic mineral concentrates

As previously announced, on 3 March 2017, the Ministry of Energy and Minerals of the Tanzanian Government announced a general ban on the export of metallic mineral concentrates following a directive made by the President of the United Republic of Tanzania in order to promote the creation of a domestic smelting industry. Following the directive we ceased all exports of our gold/copper concentrate (“concentrate”) including the 277 containers that had been approved for export prior to the ban which are located in Dar es Salaam at both the port and a staging warehouse.

The prevention of exports impacts Bulyanhulu and Buzwagi which produce gold in both doré and in concentrate form due to the mineralogy of the ore. North Mara is unaffected due to 100% of its production being doré. In 2016, the concentrate accounted for approximately 45% of Bulyanhulu’s revenues and 55% of Buzwagi’s revenues and at the group level accounted for approximately 30% of revenues. Acacia has been exporting concentrate from Bulyanhulu since 2001 and from Buzwagi since 2010 with all associated gold, copper and silver revenue declared. Whilst the proportion of gold in the concentrate is less than 0.02% it represents approximately 90% of the value of the concentrate, with copper representing approximately 10% of the value and silver less than 1%. Bulyanhulu and Buzwagi are permitted under Tanzanian law to sell their concentrate products to overseas customers and to export the concentrate in containers, and have been in full compliance with these laws and their export permits.

Since the directive we have engaged extensively with key Government officials in order to come to a resolution that allows for exports to resume. As a long term investor in Tanzania we are fully committed to supporting local business and the Government’s goal of economic growth, wealth creation and increased tax collection. To this end, we have offered to support the Government in a new study by third party experts to assess the economic potential of building a smelter in Tanzania capable of processing our concentrate as well as looking for a solution that addresses related issues.

In early April, a Presidential Committee was formed, made up of academics and industry professionals, to investigate the contents of the concentrate containers in various locations in Tanzania. This team is due to report back to the President before the end of April and has visited both Bulyanhulu and Buzwagi as part of the process. Subsequent to quarter end, the President has formed a second committee to consider economic and regulatory issues relating to the export of metallic mineral concentrates from Tanzania.

Since the directive we have continued to operate at Bulyanhulu and Buzwagi as normal and continue to stockpile concentrate at each of the sites. We have done this whilst taking a range of actions to help manage the significant financial impact of the deferral of sales, whilst ensuring we continue to safely operate the mines. We will re-assess the ongoing operation of Bulyanhulu and Buzwagi over the coming weeks due to the importance of concentrate as revenue for the two mines.

The impact of the ban during the quarter has meant that we have approximately 30,000 ounces of gold in concentrate on hand, which was produced but not yet sold. This has negatively impacted cashflow by approximately US$33 million for the quarter. In addition we received approximately US$22 million in advanced payments for concentrate produced in January and February which is currently held up in the Dar es Salaam port and was awaiting export prior to the ban being announced. The advanced payments may need to be refunded during the second quarter if the export ban is not lifted. AISC was impacted on a unit cost basis, and had we sold all of the ounces produced, AISC for the quarter would have been approximately US$852 per ounce.

Declaration of maiden high-grade Resource at West Kenya Project

During Q1 2017 we announced the maiden NI 43-101 compliant Inferred Mineral Resource Estimate (MRE) on the Liranda Corridor, within our West Kenya Project. The Inferred MRE of 3.46 million tonnes at 12.1 grams per tonne for 1.31 million ounces is primarily located on three main zones of mineralisation at the Acacia prospect. The gold mineralisation at Acacia is associated with shear zones ranging in width from 0.5 metres to 10 metres (averaging 3 metres true width dependent on the zone), hosted by a mafic volcanic sequence. The strike lengths of the explored sections of the main mineralised zones at Acacia vary between 200 metres and 600 metres and the resource is currently defined down to a vertical depth of 750 metres with the structures open down plunge.

An initial programme of approximately 45,000 metres of diamond core drilling is being undertaken during Q1-Q3 2017, with the objective of significantly increasing the Acacia prospect Inferred Resource, and at the same time producing an initial Inferred Resource on the Bushiangala prospect.  We are targeting a significant increase in the Liranda Corridor Resource to over 2 million ounces prior to the end of 2017. We also plan to commence a scoping study in H2 2017 to consider the potential for an underground mining operation. To increase the testing of the five main prospects in the Liranda Corridor we plan to increase the number of drill rigs operating from six to eight.

Gokona Underground (North Mara) technical review update

Due to the strong performance to date from the Gokona Underground at North Mara we commenced a technical review in late 2016 to better understand the near term grade profile as well as the longer term potential of the operation. This review is helping to guide the extensive drilling programmes that are underway to increase the life of the mine to at least 10 years. During the first quarter this drilling was limited to drilling adjacent to the defined stoping blocks at Gokona East Zone to test for continuity of higher grade mineralisation to

the Gokona Fault. Several significant high grade intercepts were returned including 9.0m @ 59.9g/t Au from 46.0m incl. 3m @ 204g/t Au from 49m and 19.4m @ 64.7g/t Au from 37.0m incl. 2m @ 453g/t Au from 45m.

During the quarter we updated the Mineral Resource model using multiple indicator kriging (MIK) estimation methods to better represent the higher grade zones. The long term planning team are now evaluating this updated model, and reviewing the life of mine designs and infrastructure requirements. This process will be completed during the second quarter of 2017 and together with the results from the drilling programmes will form part of the full year reserve update process.

For 2017, we have re-assessed the current reserve model in the East Zone and have applied a positive reconciliation factor of 26% to the stopes in this year’s plan. This has therefore increased the full year mined grade in Gokona East from 9.6g/t to 11.8g/t, which includes ore development tonnes, and the overall mined grade (including Gokona West) for 2017 is therefore expected to be 8.4g/t. Notwithstanding this, our expectations for production for the year remain unchanged as we have also applied more conservative mining rate and productivity assumptions based on our experience to date and the rate of ramp up in both Gokona West and East.

Minimum local shareholding and listing requirements for mining companies

On 7 October 2016, the Mining (Minimum Shareholding and Public Offering) Regulations, 2016, made by the Minister for Energy and Minerals, were published. The Regulations impose two main obligations on holders of Special Mining Licences (SMLs), namely a 30% minimum local shareholding obligation and an obligation for SML holders to list on the Dar es Salaam Stock Exchange (DSE). In their current form, these Regulations require each of our operating entities that own Bulyanhulu, Buzwagi and North Mara to individually list on the DSE and offer 30% of their shares to Tanzanians for purchase. The original deadline stipulated for such offers was within 2 years of the date of the Regulations. However, we have been informed that this deadline has now been accelerated to 23 August 2017.  This follows similar legislation introduced in Tanzania that required all Telecommunications companies operating in the country to be listed by 31 December 2016, although none has yet completed this process.

In 2011, in an attempt to promote Tanzanian ownership, Acacia Mining plc obtained a cross-listing (being a form of secondary listing for foreign companies) on the DSE, further to commitments made at the time of Acacia’s IPO in 2010.  Whilst Acacia supports the attempt to build capital markets in Tanzania and the promotion of local ownership, we will be engaging with the Capital Markets and Security Authority (CMSA), the DSE, the Ministry of Energy and Minerals and all other relevant authorities in Tanzania during the second quarter with a view to finding a route forward that is both beneficial and practical for all stakeholders.

Taxation update

We have declared the first provisional corporate tax payment for 2017 relating to North Mara amounting to US$8.7 million. This has been offset against the indirect tax receivable under the Memorandum of Settlement entered into with the Tanzanian Government. During the quarter, we incurred approximately US$25 million in VAT outflows and received no VAT refunds. This was a result of the Tanzanian Revenue Authority and the Ministry of Finance undertaking audits of all VAT claims dating back to 2014. We believe that all VAT claiming businesses are subject to this audit, which remains ongoing. As a result, our total indirect tax receivables increased from US$136 million to approximately US$152 million during the quarter, of which approximately US$32 million is covered by the MOS, following the offset of North Mara corporate tax mentioned above.

Resignation of Non-executive Director

Peter Tomsett has informed the Company that he plans to step down from the Acacia Board of Directors following the Annual General Meeting later today due to personal circumstances. Following this change, the Acacia Board will comprise eight members, including 5 Independent Non-Executive Directors, two Non-Executive Directors and one Executive Director. Acacia will announce a replacement Senior Independent Director in due course. Acacia would like to thank Peter for his valuable commitment and support to the Company during his time on the Board and wish him all the best for the future.

Key Statistics		Three months ended 31 March			Year ended 31 December
(Unaudited)		2017	2016		2016
Tonnes mined	Kt	9,481	9,407		38,491
Ore tonnes mined	Kt	3,216	2,445		9,419
Ore tonnes processed	Kt	2,420	2,488		9,818
Process recovery rate exc. Tailings reclaim	%	93.4%	89.6%		92.3%
Head grade exc. tailings reclaim	g/t	3.5	3.0		3.3
Process recovery rate inc. tailings reclaim	%	89.8%	88.9%		88.5%
Head grade inc. tailings reclaim	g/t	3.1	2.8		3.0
Gold production	oz	219,670	190,210		829,705
Gold sold	oz	184,744	184,181		816,743
Copper production	Klbs	4,656	3,803		16,239
Copper sold	Klbs	2,487	3,681		14,745
Cash cost per tonne milled exc. tailings reclaim1	US$/t	51	59		62
Cash cost per tonne milled inc. tailings reclaim1	US$/t	44	51		53
Per ounce data
Average spot gold price2	US$/oz	1,219	1,183		1,251
Net average realised gold price1	US$/oz	1,221	1,150		1,240
Total cash cost1	US$/oz	577	693		640
All-in sustaining cost1	US$/oz	934	959		958
Average realised copper price	US$/lbs	2.79	2.10		2.21

Financial results

	Three months ended 31 March			Year ended 31 December
(Unaudited, in US$'000 unless otherwise stated)	2017	2016		2016
Revenue	233,901	220,909		1,053,532
Cost of sales	(149,396)	(171,900)		(727,080)
Gross profit	84,505	49,009		326,452
Corporate administration	(6,642)	(5,302)		(21,895)
Share based payments	(10,424)	(3,938)		(29,929)
Exploration and evaluation costs	(6,778)	(5,951)		(24,020)
Corporate social responsibility expenses	(2,195)	(2,870)		(10,665)
Other income (charges)	(10,815)	(608)		11,649
Profit/(loss) before net finance expense and taxation	47,651	30,340		251,592
Finance income	597	293		1,512
Finance expense	(2,238)	(2,866)		(11,047)
Profit/(loss) before taxation	46,010	27,767		242,057
Tax credit/(expense)	(19,183)	(80,177)		(147,113)
Net profit/(loss) for the year	26,827	(52,410)		94,944

¹ These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to “Non IFRS measures” on page 15 for definitions.

² Reflect the London PM fix price.

For further information, please visit our website: http://www.acaciamining.com/ or contact:

Acacia Mining plc

[phone]

Brad Gordon, Chief Executive Officer

Andrew Wray, Chief Financial Officer

Giles Blackham, Investor Relations Manager

Bell Pottinger

[phone]

Lorna Cobbett

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. Our ambition is to create a leading African Company.

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 20 April 2017 at 08:45 AM London time.

The access details for the conference call are as follows:

      Participant dial in:           [phone]

      Password:                       Acacia Mining

A recording of the conference call will be made available on the Company’s website, 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. 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

Acacia delivered production of 219,670 in Q1 2017, an increase of 15% compared to the prior year quarter, while AISC of US$934 per ounce sold and cash cost of US$577 per ounce sold were 3% and 17% respectively lower than Q1 2016. For reference purposes, if Q1 sales ounces equalled Q1 production, AISC would have been approximately US$852 per ounce and cash costs would have been approximately US$551 per ounce.

North Mara achieved gold production of 96,468 ounces for the quarter, 29% higher than in Q1 2016. This was a result of a 31% higher head grade driven by the higher contribution from the Gokona underground mine and a resultant 3% improvement in recoveries. Gold ounces sold for the quarter of 93,740 ounces were 26% higher than the comparative quarter and broadly in line with production. AISC for the quarter saw a slight decrease to US$717 per ounce sold (Q1 2016: US$737/oz) as a result of the impact of increased sales volumes, partly offset by increased capitalised development costs, higher sustaining capital expenditure and a higher drawdown of ore inventory.

Bulyanhulu produced 63,346 gold ounces, 19% lower than the comparative period but in line with plan. This was due to ounces produced from underground mining decreasing by 22% over Q1 2016, driven by a reduction in both ore tonnes and head grade. Lower underground mined grades were expected due to mine sequencing with reduced access to higher grade stopes. AISC per ounce sold for the quarter of US$1,229 was 25% higher than Q1 2016 (US$983) mainly driven by the impact of lower sales ounces due to the lower production levels and the inability to export metallic mineral concentrates and higher cash costs mainly driven by increased external services.

At Buzwagi, gold production of 59,856 ounces was 62% higher than Q1 2016 due to a 64% increase in head grade as a result of higher grade delivered from the main ore zone at the bottom of the pit, compared to a generally lower mine grade in Q1 2016 given focus on waste movement in the first half of 2016. AISC for the quarter of US$773 per ounce sold decreased by 38% compared to Q1 2016, mainly driven by the higher production base combined with lower sustaining capital expenditure, despite the significant lag in sales against production.

Total tonnes mined during the quarter amounted to 9.5 million tonnes, in line with Q1 2016, as a result of a 24% increase in total tonnes mined at North Mara, offset by lower tonnes from Bulyanhulu and Buzwagi. Ore tonnes mined of 3.2 million tonnes were 32% higher than Q1 2016 mainly due to higher ore tonnes from Buzwagi as a result of increased access to ore zones in the open pit in Q1 2017.

Ore tonnes processed amounted to 2.4 million tonnes, a decrease of 3% on Q1 2016, resulting from marginally lower throughput at all three sites. This was offset by a 11% increase in head grade primarily driven by a 31% higher head grade at North Mara driven by the higher contribution from the Gokona underground mine and a 64% increase in head grade at Buzwagi as a result of higher grade ore mined, driving production 15% higher compared to Q1 2016.

Cash costs of US$577 per ounce sold for the quarter were 17% lower than in Q1 2016, primarily due to:

• Higher production base (US$93/oz); and
• Higher capitalisation of development costs mainly at North Mara due to higher waste stripping at Nyabirama Stage 4 and at Bulyanhulu due to increased underground waste development activity (US$49/oz); offset by
• Higher contracted services costs at Bulyanhulu due to increased geology and contracted maintenance costs (US$40/oz).

Included in cash cost, and ultimately cost of sales, is a credit of approximately US$15 million (US$81/oz) relating to the build-up in finished gold inventory due to concentrate sales delays which largely offsets the impact of the reduction in sales ounces in the cash cost per ounce sold calculation.

All-in sustaining cost of US$934 per ounce sold for the quarter was 3% lower than Q1 2016, despite the lag in sales against production. This was driven by the lower cash costs (US$116/oz) (refer to above) partly offset by higher capitalised development costs at both North Mara and Bulyanhulu (US$49/oz) and the impact of a higher revaluation charge relating to future share-based payments compared to Q1 2016 (US$35/oz).

If our sales ounces equalled production, AISC for the quarter would have been approximately US$852 per ounce sold, compared to US$924 per ounce sold on the same basis in Q1 2016, a decrease of 8%.

Cash generated from operating activities of US$25.2 million decreased by 52% from Q1 2016. The inability to export our concentrate has had a negative impact on operating cash flow of approximately US$33 million. Working capital outflows mainly relating to increases in supplies inventory and indirect tax receivables further impacted cash generated from operating activities.

Capital expenditure amounted to US$46.8 million compared to US$36.0 million in Q1 2016. Capital expenditure primarily comprised of capitalised development and stripping (US$33.9 million), investment in fixed equipment and mining infrastructure mainly at Bulyanhulu (US$2.7 million), investment in mobile equipment and component change-outs mainly at North Mara (US$1.7 million) and land purchases at North Mara (US$1.2 million).

Mine Site Review

Bulyanhulu

Key statistics

		Three months ended 31 March			Year ended 31 December
(Unaudited)		2017	2016		2016
Key operational information:
Ounces produced	oz	63,346	78,426		289,432
Ounces sold	oz	53,805	72,448		279,286
Cash cost per ounce sold1	US$/oz	786	661		722
AISC per ounce sold1	US$/oz	1,229	983		1,058
Copper production	Klbs	1,498	1,817		6,391
Copper sold	Klbs	956	1,580		5,570
Run-of-mine:
Underground ore tonnes hoisted	Kt	205	243		909
Ore milled	Kt	221	252		933
Head grade	g/t	8.4	9.8		9.3
Mill recovery	%	91.4%	87.9%		91.4%
Ounces produced	oz	54,256	69,776		254,552
Cash cost per tonne milled1	US$/t	171	174		197
Reprocessed tailings:
Ore milled	Kt	413	378		1,650
Head grade	g/t	1.4	1.5		1.4
Mill recovery	%	47.5%	46.1%		45.8%
Ounces produced	oz	9,089	8,650		34,880
Capital Expenditure
- Sustaining capital	US$('000)	4,212	7,085		20,231
- Capitalised development	US$('000)	16,070	13,168		63,082
- Expansionary capital	US$('000)	478	194		1,262
		20,760	20,447		84,575
- Non-cash reclamation asset adjustments	US$('000)	1,042	4,214		10,728
Total capital expenditure	US$('000)	21,802	24,661		95,303

¹These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ‘Non-IFRS measures” on page 15 for definitions.

Operating performance

Gold production amounted to 63,346 ounces, which was 19% lower than Q1 2016, but in line with plan. As guided, Q1 is expected to be the weakest quarter in 2017 at Bulyanhulu due to the impact of mine sequencing and lack of access to high grade stopes during the quarter. Production during the quarter was comprised of 30,787 ounces of gold in concentrate and 32,559 ounces of gold in doré.

Gold sold for the quarter of 53,805 ounces, was 15% lower than production and 26% lower than Q1 2016 mainly as a result of the lower production and the inability to export concentrate from early March.

Copper production of 1.5 million pounds for the quarter was 18% lower than Q1 2016 mainly driven by lower copper grades. Copper sold was 40% lower than Q1 2016, primarily due to the lack of exports of concentrate combined with lower copper production.

Cash costs of US$786 per ounce sold were 19% higher than Q1 2016 (US$661), mainly due to the impact of lower sales ounces on individual cost items combined with the lower production base (US$137/oz) and higher contracted services cost (US$90/oz), partly offset by higher capitalised development costs driven by higher waste development activity (US$43/oz) and lower sales related costs due to lower sales volumes (US$34/oz). Included in cash costs is a credit of approximately US$5.6 million (US$104/oz) relating to the build-up of finished gold inventory as a result of concentrate sales delays.

AISC per ounce sold for the quarter of US$1,229 was 25% higher than Q1 2016 (US$983) driven by the impact of lower sales ounces on individual cost items ($112/oz), higher cash costs ($125/oz) and higher capitalised development costs (US$54/oz), partly offset by lower sustaining capital expenditure ($53/oz).

Capital expenditure for the quarter before reclamation adjustments amounted to US$20.8 million, in line with Q1 2016 (US$20.4 million), as a decrease in sustaining capital expenditure (US$2.9 million) was offset by an increase in capitalised development (US$2.9 million).

Capital expenditure mainly consisted of capitalised underground development costs (US$16.1 million) and investment in fixed equipment and mining infrastructure including the West fan upgrade and underground ventilation raise boring (US$2.3 million).

Buzwagi

Key statistics

		Three months ended 31 March			Year ended 31 December
(Unaudited)		2017	2016		2016
Key operational information:
Ounces produced	oz	59,856	37,063		161,830
Ounces sold	oz	37,199	37,433		161,202
Cash cost per ounce sold1	US$/oz	694	1,171		1,031
AISC per ounce sold1	US$/oz	773	1,246		1,095
Copper production	Klbs	3,158	1,985		9,847
Copper sold	Klbs	1,531	2,100		9,175
Mining information:
Tonnes mined	Kt	5,267	5,926		21,585
Ore tonnes mined	Kt	2,053	1,303		5,317
Processing information:
Ore milled	Kt	1,076	1,128		4,404
Head grade	g/t	1.8	1.1		1.2
Mill recovery	%	96.7%	94.3%		94.5%
Cash cost per tonne milled1	US$/t	24	39		38
Capital Expenditure
- Sustaining capital	US$('000)	141	1,150		3,582
- Capitalised development	US$('000)	-	-		-
		141	1,150		3,582
- Non-cash reclamation asset adjustments	US$('000)	(78)	1,421		4,524
Total capital expenditure	US$('000)	63	2,571		8,106

¹These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to “Non-IFRS measures” on page 15 for definitions.

Operating performance

Gold production for the quarter of 59,856 ounces was 62% higher than in Q1 2016 due to a 64% increase in head grade as a result of higher grade ore mined from the main ore zone at the bottom of the pit in Q1 2017 as a result of the focus on waste movement in the first half of 2016. Production during the quarter was comprised of 40,002 ounces of gold in concentrate and 19,854 ounces of gold in doré.

Gold sold for the quarter of 37,199 ounces, was 38% lower than production and in line with Q1 2016, primarily due to the inability to export concentrate from the beginning of March.

Copper production of 3.2 million pounds for the quarter was 59% higher than the prior quarter period mainly due to increased copper grades.  Copper sales decreased by 27% mainly due to the restrictions placed on the export of concentrate during the quarter.

Cash costs for the year of US$694 per ounce sold were significantly lower than Q1 2016 (US$1,171/oz), primarily driven by the higher production base (US$437/oz) and lower realised gold hedge losses (US$52/oz). Included in cash costs is a credit of approximately US$9.5 million (US$255/oz) relating to the build-up of finished gold inventory as a result of concentrate sales delays.

AISC per ounce sold of US$773 was 38% lower than the Q1 2016 (US$1,246/oz). This was mainly driven by the lower cash costs (US$477/oz) (refer to above) combined with lower sustaining capital expenditure ($27/oz).

Capital expenditure before reclamation adjustments amounted to US$0.1 million, 88% lower than Q1 2016 (US$1.2 million). Capital expenditure for the quarter consisted of the corrosion treatment of the process plant with the planned expansion of the tailings storage facility not yet started.

North Mara

Key statistics

		Three months ended 31 March			Year ended 31 December
(Unaudited)		2017	2016		2016
Key operational information:
Ounces produced	oz	96,468	74,721		378,443
Ounces sold	oz	93,740	74,300		376,255
Cash cost per ounce sold1	US$/oz	410	484		410
AISC per ounce sold1	US$/oz	717	737		733
Open pit:
Tonnes mined	Kt	3,854	3,114		15,556
Ore tonnes mined	Kt	803	775		2,752
Mine grade	g/t	2.8	1.6		1.9
Underground:
Ore tonnes trammed	Kt	154	125		440
Mine grade	g/t	11.3	10.6		15.6
Processing information:
Ore milled	Kt	710	731		2,830
Head grade	g/t	4.6	3.5		4.5
Mill recovery	%	92.6%	90.2%		92.0%
Cash cost per tonne milled1	US$/t	54	49		55
Capital Expenditure
- Sustaining capital2	US$('000)	6,256	2,378		28,317
- Capitalised development	US$('000)	17,797	11,655		75,609
- Expansionary capital	US$('000)	1,536	86		2,399
		25,589	14,119		106,325
- Non-cash reclamation asset adjustments	US$('000)	124	3,177		6,703
Total capital expenditure	US$('000)	25,713	17,296		113,028

¹These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ‘Non-IFRS measures” on page 15 for definitions.

² Includes land purchases recognised as long term prepayments.

Operating performance

North Mara achieved gold production of 96,468 ounces for the quarter, 29% higher than in Q1 2016. This was primarily a result of 31% higher head grade driven by the higher contribution from the Gokona underground mine and a resultant 3% improvement in recoveries. Gold ounces sold for the quarter of 93,740 ounces were 26% higher than the prior year quarter and broadly in line with production.

Cash costs of US$410 per ounce sold were 15% lower than Q1 2016 (US$484), mainly driven by the higher production base (US$58/oz) and higher capitalisation of development costs due to higher waste stripping at Nyabirama Stage 4 (US$76/oz), partly offset by an increased drawdown of ore inventory compared to Q1 2016 (US$35/oz).

AISC of US$717 per ounce sold was 3% lower than Q1 2016 (US$737/oz) as a result of lower cash costs (US$74/oz) (refer above) and the impact of increased sales volumes (US$52/oz), partly offset by higher capitalised development costs (US$66/oz) and higher sustaining capital expenditure (US$41/oz).

Capital expenditure for the quarter before reclamation adjustments of US$25.6 million was 81% higher than in Q1 2016 (US$14.1 million). Key capital expenditure include capitalised stripping costs (US$13.4 million), capitalised underground development costs (US$4.4 million), capitalised drilling at Nyabirama underground (US$1.5 million) and investment in mobile equipment and component change-outs (US$1.2 million). In addition, US$1.2 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

Brownfield Exploration

Significant brownfield programmes and budgets were approved for 2017 for North Mara to undertake surface and underground drilling activities at Gokona, Nyabirama, and Nyabigena. During the quarter there was limited underground drilling at Bulyanhulu but there will be a step up in drilling activity on the Reef 2 series through the rest of the year.

North Mara

Nyabirama

The second stage of the surface diamond core drilling programme adjacent to the Nyabirama pit was completed during the quarter, and a subsequent programme of infill drilling was commenced. This drilling has been successful in showing the down-dip and down-plunge extension of higher grade quartz-vein lode structures to a vertical depth of approximately 950 metres below surface and approximately 800 metres down-plunge to the south-west of the current open pit.

Results received during the quarter include:

• NBD0147              3m @ 5.1 g/t Au from 397.0m

4m @ 9.1 g/t Au from 428.0m

• NBD0149A           3m @ 66.6 g/t Au from 873.0m incl. 1m @ 198g/t Au from 874m

5m @ 4.8 g/t Au from 890.0m

• NBD0152              6m @ 51.9 g/t Au from 592.0m incl. 1m @ 280g/t Au from 594m
• NBD0153              3m @ 6.9 g/t Au from 997.0m,
• NBD0154              5m @ 4.5 g/t Au from 511.0m

4m @ 4.6g/t Au from 537.0m

3m @ 6.5g/t Au from 546.0m

An initial block model is currently being developed incorporating the drilling completed to date to allow an assessment of the potential for an underground operation; whilst a programme of approximately 12,000 metres of diamond core drilling has commenced to infill the previous drilling to approximately 50 metre spacing.

If the results of the infill programme are successful, they will be incorporated into a Mineral Resource model to form the basis for further studies on a potential underground exploration decline to further test the system and enable a smooth transition to underground production by the time of the completion of the open pit in 2021.

Gokona Underground

With underground development activity focused on delivering production stopes in Gokona West Zone, most of the drilling activity for the quarter was grade control diamond drilling to support those activities.

The key drilling platform on the 1030mRL elevation continued to be developed during the quarter, with commencement of exploration drilling scheduled for the second quarter of 2017. Exploration activity during the first quarter was limited to some additional drilling adjacent to the defined stoping blocks at Gokona East Zone to test for continuity of higher grade mineralisation to the Gokona Fault.

Several significant high grade intercepts were returned adjacent to the Gokona Fault extending the previously modelled mineralisation, including:

• UKGC_00262      19.4m @ 64.7g/t Au from 37.0m incl. 2m @ 453g/t Au from 45m
• UKGC_00260      9.0m @ 59.9g/t Au from 46.0m incl. 3m @ 204g/t Au from 49m
• UGKD_00107      24.0m @ 12.5g/t Au from 31.0m
• UKGC_00251      25.0m @ 7.0g/t Au from 36.0m
• UGKD_00113      10.0m @ 10.4 g/t Au from 32.0m

In the second quarter, underground diamond core drilling will test for the deeper fault offset extension of the Gokona East Zone mineralisation, test continuity of higher grade mineralisation beneath the existing open pit and immediately west of the Gokona Fault, commence drilling of the Gokona Central area below the open pit, and continue grade control drilling of Gokona West. The programme will comprise of approximately 75,000 metres of drilling over the next two years, with approximately 45,000 metres to be drilled in 2017. The aim of these programmes is to be able to increase the underground life of mine to at least 10 years.

Nyabigena

An initial programme of approximately 10,000 metres of surface diamond core drilling commenced at the end of the first quarter at Nyabigena, with results pending on the first hole. This programme is designed to test the continuity of mineralisation below the existing open pit, better define offsetting fault structures, and enable more detailed metallurgical domaining of the deposit. Subject to the success of this programme and initial desktop study in 2017, further drilling is planned for 2018; after which a detailed study on the potential for development of an underground operation could be undertaken.

Greenfield Exploration

Kenya

West Kenya Project

During Q1 2017 we announced the maiden NI 43-101 compliant Inferred Mineral Resource Estimate (MRE) on the Liranda Corridor, within our West Kenya Project. The Inferred MRE of 3.46 million tonnes at 12.1 grams per tonne for 1.31 million ounces is primarily located on three main zones of mineralisation at the Acacia prospect. The gold mineralisation at Acacia is associated with shear zones ranging in width from 0.5 metres to 10 metres (averaging 3 metres true width; dependent on the zone), hosted by a mafic volcanic sequence. The strike lengths of the explored sections of the main mineralised zones at Acacia vary between 200 metres and 600 metres and the resource is currently defined down to a vertical depth of 750 metres with the structures open down plunge.

In addition, we have identified mineralised zones on the Bushiangala prospect, approximately one kilometre away from the Acacia prospect.  At this stage this material remains unclassified due to drill density and the need to further understand the controls on the mineralisation and its continuity. Recent results from the Bushiangala prospect include, 7m @ 17.6g/t Au, 3m @ 6.88g/t Au and 4m @ 9.99g/t from step-out holes. Based on the work undertaken to date, the current scale of the mineralisation is between 0.60Mt and 1.50Mt at a grade between 6.0g/t Au and 10.0g/t Au, for a metal target of between 190,000 ounces and 290,000 ounces of contained gold. A key element of the 2017 drilling programmes at Bushiangala is to establish an Inferred Resource and to expand the scale of the targeted mineralisation.

Since 2014 through to the time of the maiden resource announcement, the total drilling on Liranda Corridor targets amounted to 44 Reverse Circulation holes for 4,438 metres and 132 diamond core holes for 64,700 metres.  During Q1 2017, a total of 29 diamond holes were completed or are underway for 16,708 metres, with three diamond core rigs drilling on Acacia and three drilling on Bushiangala.

Current drilling on the Acacia prospect is targeting a significant expansion to the resource through testing up and down plunge extensions, as well as extensions along strike to the west. Drilling during the quarter continued to intersect significant high grade results from this drilling including results of:

• LCD0128* - 4.0m @ 33.9g/t Au from 302m, 4.2m @ 19.0g/t Au from 552m, and 2.5m @ 76.7g/t Au from 577m.

• LCD0130* - 3.1m @ 14.1 g/t Au from 197m,
• LCD0132* - 1.3m @ 65.6g/t Au from 301m and 4.7m @ 14.0g/t Au from              446.5m.
• LCD0133 - 0.5m @ 97.2g/t Au from 585.5m and 3.3m @ 10.9g/t Au from 753.7m.
• LCD0135 - 3.3m @ 33.0g/t Au from 664.9m and 0.5m @ 25.0g/t Au from 687m
• LCD0138 - 1.0m @ 26.0g/t Au from 200m and 2m @ 22.6g/t Au from 214m,
• LCD0140 - 2.1m @ 11.7g/t Au from 441.6m and 2.3m @ 15.1g/t Au from 482m.
• LCD0141 - 3.1m @ 16.1g/t Au from 708m,
• LCD0145 - 3.2m @ 14.5g/t Au from 561m.
• LCD0146 - 2.5m @ 28.5g/t Au from 270.7m.
• LCD0147 - 1.3m @ 12.5g/t Au from 132.9m and  0.6m @ 39.1g/t Au from 251.4m.
• LCD0150 - 1.8m @ 7.56g/t Au from 457.2m and 6.0m @ 6.40g/t Au from 558m
• LCD0152 - 6.8m @ 12.7g/t Au from 211.7m,
• LCD0153 - 1.0m @ 10.6g/t Au from 384m and 2m @ 14.2g/t Au from 576.8m

Note: * - holes included in maiden Inferred resource received during the quarter

An initial programme of approximately 45,000 metres of diamond core drilling is being undertaken during Q1-Q3 2017; with the objective of significantly increasing the Inferred Resource on the Liranda Corridor to more than 2 million ounces. We also plan to commence a scoping study in H2 2017 to consider the potential for an underground mining operation.  In order to increase the testing of the five main prospects in the Liranda Corridor we also plan to increase the number of drill rigs operating from six to eight.

Burkina Faso

During Q1 2017 we continued to explore our properties in the highly prospective Houndé Belt in southwest Burkina Faso. Acacia currently has four joint ventures and an interest in over 2,700km² of prospective greenstone belt. Acacia manages all of the joint ventures. A major component of Q1 2017 work programmes was to review the structural architecture of our land holdings and complete a target generation exercise using airborne aeromagnetic and radiometric data and ground IP geophysical data where available.  These target generation layers are now being synthesised with our surface geochemical data layers to develop priority drilling targets. To date we have delineated more than 65 targets warranting follow-up by either mapping or reconnaissance drilling. 

South Houndé Joint Venture (Sarama Resources Limited)

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. Acacia has taken over management of the South Houndé JV as of 1st January. During the quarter a total of 11,490 metres of Aircore drilling was completed on the Ouangoro prospect anomaly, 981 metres of RC pre-collars and 2,330 metres of diamond core tails were drilled into the Chewbacca and Yoda shoots on the MM Zone and into the Jabba shoot on the MC Zone structures at Tankoro. Mapping and surface sampling was conducted on the regional prospects.

Tankoro - MM and MC Zones

During the quarter we continued a programme of drilling to test the down-plunge extensions of higher grade gold mineralisation related interpreted cross structures at the MM and MC Zones within the Tankoro resource. A “results based” phased strategy has been adopted, “cycling” the rig between the Chewbacca, Yoda, Anakine and Jabba zones within the MM and MC parallel mineralised zones.  All holes drill to date have intersected the targeted porphyries and cross structures, however, the high-grade shoots are either lower grade than expected, or of shorter strike extend that expected.

The current phase of drilling continues to target interpreted high grade domains associated with cross-structures and is applying the learnings from the initial holes.  Results for MM Zone drilling are pending and expected to be received during Q2 2017, with visually encouraging zones observed in drilling to date.  RC and diamond core drilling elsewhere on the Tankoro Corridor will be focused on additional drilling on the northeast extension of the mineralised system at the Phantom East prospect.  Additionally, we plan to undertake diamond core drilling at the Guy prospect, which is a multi-kilometre gold soil anomaly occurring at the intersection of the Tankoro Corridor (NE strike) and the Guy Corridor (north-south structure)

Ouangoro Anomaly

Aircore drilling commenced at the beginning of February on the Ouagoro Anomaly with the plan to drill 19 regional 1 kilometre spaced traverses across a 15 kilometre x 4 kilometre zone of semi-continuous gold-in-soil geochemical anomalism along an interpreted NNE-trending linear geophysical anomaly. To date 10 traverses have been drilled for 11,490 metres advance, with results for first four traverses received at quarter-end.  Positive results have been returned from all four traverses including better results of  8m @ 0.51g/t Au from 46m, 20m @ 0.67g/t Au from 28m (including 2m @ 3.09g/t Au), 8m @ 0.86g/t from surface (including 2m @ 2.32g/t Au), 21m @ 0.26g/t Au from 8m and 18m @ 0.61g/t Au from 6m (including 4m @ 1.69g/t Au). Mineralisation in drilling and observed in artisanal workings is typically associated with quartz veins in weathered greywacke, siltstone and sandstone lithologies.  It is anticipated that infill Aircore drilling (400m spaced) will be completed as Phase 2 of the programme once all results are received and interpreted.

Central Houndé Joint Venture (Thor Explorations Limited)

Surface geochemical sampling undertaken over the past 18 months has identified several very encouraging zones of gold anomalism coincident with the interpreted Legue-Bongui structural corridor, including an 8km x 2km anomalous gold zone. During the quarter we completed a structural targeting exercise, reviewed the surface gold anomalies from soil sampling, and undertook multi-element geochemical analysis of all samples, using a portable XRF, from the regional soil sampling programmes.  As a result of this targeting exercise we delineated 35 targets across the Central Houndé project area, and we commenced field validation, geological mapping and further surface sampling programmes on priority target areas.

During Q2 2017, we plan to continue review of our current targets and commence RC drilling in early May of a number of regional targets already reviewed with programmes designed.

Pinarello & Konkolikan Joint Venture (Canyon Resources Limited)

Surface geochemical sampling undertaken over the past two years has identified several very encouraging zones of gold anomalism coincident with the interpreted structural corridors, magnetic features and surface IP geophysical anomalies.  During the quarter we completed a structural targeting exercise, reviewed the surface gold anomalies from soil sampling, and undertook multi-element geochemical analysis, using a portable XRF, of all samples from the regional soil sampling programmes.  As a result of this targeting exercise we delineated 28 targets across the Pinarello project area, and we commenced field validation, geological mapping and further surface sampling programmes on priority target areas.

Throughout the quarter we continued Aircore drilling with 227 Aircore holes drilled for 11,549 metres on three wide spaced traverses over a strike distance of 2km of the 8km x 3km Tangalobe prospect.  The objective of the drilling programme is to test gold-in-soil anomalies that are coincident with anomalous termite mound results and interpreted structural/magnetic targets. The geology of the area is characterised by sedimentary sequences. There is a prominent shear zone striking at ~040° and moderately-steeply dipping towards southeast. Quartz float is ubiquitous in the area of drilling. Potential mineralised zones in the holes drilled so far are associated with oxidized quartz veins and haematite alteration. Partial assay results have been received to date with better results including: 4m @ 1.64g/t Au from 49m, 2m @ 6.0g/t Au from 57m, 3m @ 0.77g/t from 29m, 3m @ 0.72g/t Au from 5m, 1m @ 1.02g/t Au from 44m, 2m @ 0.60g/t Au from 31m and 1m @ 1.33g/t Au from 44m.

Acacia has now earned 75% equity in the project and we have therefore entered the contributory/dilution phase of the JV agreement.

Programmes for Q2 2017 include field RC drilling, Aircore drilling, geological mapping, prospect reviews, further infill soil sampling and trenching.

Frontier JV

Regional regolith and geological mapping has been completed for both licences that make up the JV. A regional 800m x 400m reconnaissance soil sampling programme and termite mound, rock chip and quartz lag sampling programmes have been completed. A total of 7,195 samples were collected. Approximately two third of assay results had been received by the end of the quarter. Interpretation of preliminary gold assays and litho-structural information from regolith mapping and aeromagnetic surveys has resulted in an initial 12 regional targets being defined for follow-up work.

The Q2 2017 programme includes field validation of delineated soil anomalies, infill soil sampling and regolith / geological mapping.  It is anticipated several traverses of Aircore drilling will be completed across high priority target areas from the structural targeting combined with gold-in-soil anomalies.

Tanzania

Nyanzaga

During the quarter OreCorp Limited published the results of the Pre-Feasibility Study (“PFS”) on the Nyanzaga Project. The PFS, led by Lycopodium Minerals Pty Ltd of Perth, Western Australia, delivered an optimal development scenario of a 4Mtpa concurrent open pit (“OP”) and underground (“UG”) operation for pre-production capital costs estimate of US$287M, which includes a US$33M contingency. The concurrent mining schedule significantly reduced the low grade stockpiling scenario considered in the Scoping Study and increased the OP contained ounces and life of mine (“LOM”) average mineralised material grade processed from 1.9 g/t gold in the Scoping Study to 2.0 g/t (+5%).

Based on the PFS, the Project is expected to deliver an average gold production of 213koz per annum over a 12 year LOM, peaking at 249koz in Year 3 and totalling approximately 2.56Moz of gold produced over the LOM. The AISC and AIC are estimated to be US$838/oz and US$858/oz respectively over the LOM. Acacia and OreCorp have agreed the scope of the Definitive Feasibility Study (“DFS”) and this has commenced early in the second quarter. The DFS will focus on optimising the OP and UG schedules; metallurgy and comminution aimed at maximising metallurgical recoveries, reagent and power consumption; and confirming detailed plant design.

Mali

In Mali we continued to define and drill test surface gold anomalies identified in late 2016.  At the same time, we continued to build our land position in the Senegal-Mali Shear Zone (SMSZ) with a the grant of a further two land packages, one under joint venture (Bou Bou) and the other 100% Acacia (Gourbassi). Acacia now holds five exploration permits covering 191 square kilometres on the SMSZ.

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. During the quarter, a ground-based gradient array induced polarisation geophysical survey was completed (31 line km) and interpreted. Results from IP, soils, drilling and mapped and interpreted geology have been used to refine existing and define new targets for drill testing.  At least 12 targets with co-incident IP chargeability, resistivity, and surface gold anomalism have been identified for RC drill testing during H1 2017.

RC drilling commenced in mid-March 2017 with 14 RC holes drilled for 1,856 metres. Assay results have only been received for the first hole at quarter end with best assay being 15m @ 0.5g/t Au from 60m.

Bourdala JV

The Boudala JV is a joint venture with a local company over the Bou Bou licence located some 15km from the centroid of the Tintinba JV further to the south. The property is located within the central portion of the Kedougou-Kenieba Inlier and just to the east of the highly prospective Senegal-Mali Shear Zone. Acacia can earn up to 100% through a series of staged payments over a period of 36 months.

During the quarter Acacia undertook mapping and rock chip sampling as well as backfilling and clearing of artisanal pits in the main target area ahead of planned RC drilling. An RC drill traverse designed to test a broad zone of mapped mineralisation 300m x 500m is expected to commence in April.

Gourbassi Est

During Q1 2017, the Gourbassi Est licence was received. The licence is located immediately west of the Tintinba JV in the Central Senegal Mali Shear Zone area of the Kedougou-Kenieba Inlier. The property is located to the west of the SMSZ in an area dominated by footway splays to the Central SMSZ. The programme for Q2 2017 is to review the historic data and completed mapping and surface sampling programmes.  Dependent on results of this first pass work we will commence RC and/or diamond core drilling during Q2.

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

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$000)	Three months ended 31 March			Year ended 31 December
(Unaudited)	2017	2016		2016
Gold revenue	225,628	211,885		1,014,468
Less: Realised gold hedge losses	-	-		(1,818)
Net gold revenue	225,628	211,885		1,012,651
Gold sold (ounces)	184,744	184,181		816,743
Net average realised gold price (US$/ounce)	1,221	1,150		1,240

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 31 March			Year ended 31 December
(Unaudited)	2017	2016		2016
Cost of Sales
Direct mining costs	98,783	115,901		479,022
Third party smelting and refining fees	5,321	6,857		25,588
Realised losses on economic hedges	108	3,915		9,619
Realised losses on gold hedges	-	-		1,818
Royalty expense	10,642	10,017		47,237
Depreciation and amortisation*	34,542	35,210		163,796
Total	149,396	171,900		727,080
Total cost of sales	149,396	171,900		727,080
Deduct: depreciation and amortisation*	(34,542)	(35,210)		(163,796)
Deduct: realised losses on gold hedges	-	-		(1,818)
Deduct: Co-product revenue	(8,273)	(9,024)		(39,063)
Total cash cost	106,581	127,666		522,403
Total ounces sold	184,744	184,181		816,743
Total cash cost per ounce sold	577	693		640

*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 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 31 March 2017					Three months ended 31 March 2016
(US$/oz sold)	Bulyanhulu	North Mara	Buzwagi	Group		Bulyanhulu	North Mara	Buzwagi	Group
Cash cost per ounce sold	786	410	694	577		661	484	1,171	693
Corporate administration	32	26	34	36		26	34	27	29
Share based payments	13	8	25	56		7	5	7	21
Rehabilitation	12	10	5	10		6	8	4	6
CSR expenses	8	6	12	12		4	17	7	16
Capitalised development	299	190	-	183		182	157	0	135
Sustaining capital	79	67	3	60		97	32	30	59
Total AISC	1,229	717	773	934		983	737	1,246	959

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.

Where reference is made to AISC per ounce produced, this is calculated in a similar manner as set out above, but adjusted for the impact of the change in inventory charge/ credit relating to finished gold inventory. This recalculated number is then divided by ounces produced.

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 31 March			Year ended 31 December
(Unaudited)	2017	2016		2016
Net profit/ (loss) for the period	26,827	(52,410)		94,944
Plus income tax (credit)/ expense	19,183	80,177		147,113
Plus depreciation and amortisation*	34,542	35,210		163,796
Plus finance expense	2,238	2,866		11,047
Less finance income	(597)	(293)		(1,512)
EBITDA	82,193	65,550		415,388

^{*Depreciation and amortisation includes the depreciation component of the cost of inventory sold.}

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 (c) as contained in the reconciliation to adjusted net earnings below.

EBIT is a non-IFRS financial measure and 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 as follows:

(US$000)	Three months ended 31 March			Year ended 31 December
(Unaudited)	2017	2016		2016
Net earnings/(loss)	26,827	(52,410)		94,944
Adjusted for:
Restructuring cost (a)	-	861		7,689
One off legal settlements/recoveries (b)	-	-		(3,455)
Discounting of indirect taxes (c)	-	-		(9,719)
Prior year tax positions recognised 1	-	69,916		69,916
Tax impact of the above	-	(258)		1,646
Adjusted net earnings	26,827	18,109		161,021

¹ For the year ended 31 December 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.

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.

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