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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
19 October 2018
Results for the 3 months ended 30 September 2018 (Unaudited)
Based on IFRS and expressed in US Dollars (US$)
Acacia Mining plc ("Acacia") reports third quarter results
"During the third quarter Acacia is pleased to have delivered a strong
operational performance, producing 136,640 ounces of gold at an all-in
sustaining cost ("AISC") of US$880 per ounce sold. This is a testament to the
resilience and dedication of all of our people who continue to do their very
best in the face of what is now an increasingly challenging operating
environment in Tanzania," said Peter Geleta, Interim CEO of Acacia. "Having
returned the Group to free cash generation during the second quarter of this
year, I am also pleased to note that we have maintained this trend, remaining
cash flow positive this quarter, with a net cash position of US$74 million. As
a result of our consistently strong production performance in the year to date,
we are now targeting production to be marginally in excess of 500,000 ounces
for the full year. In line with our on-going cost reduction strategy, we have
also steadily reduced our costs throughout the year and are now tracking
towards the lower end of our AISC guidance range of US$935-985 per ounce."
Mr Geleta also stated: "Against this strong operating performance, I am,
however, deeply concerned about the increasing risks to the safety and security
of our people and the increasingly challenging operating environment in
Tanzania which could impact the outlook for the business. I am particularly
concerned with the criminal charges now being brought against several current
or former employees over the past week, in connection with matters which are
being raised in the arbitrations with the Government of Tanzania relating to
Bulyanhulu and Buzwagi. We are seeking to engage with Barrick to understand how
the recent significant escalations of Government actions against BGML, NMGML
and PML and employees will be taken into account in any further direct
discussions between Barrick and the Government. We will also be reaching out
to the Government to seek the opportunity for direct dialogue regarding the
ongoing disputes between the Government, the Company and the broader Acacia
Group, and also to inform the Government that failing a negotiated resolution
the Company may need to pursue claims under the relevant bilateral investment
treaty."
Operational Highlights
* Gold production of 136,640 ounces was 29% lower than Q3 2017 but ahead of
both Q1 2018 (120,981 ounces) and Q2 2018 (133,778 ounces)
* Gold sales of 135,875 ounces were in line with production
* Expect to exceed the upper end of our full year production guidance range
(435,000 to 475,000 ounces) with production now expected to be marginally
in excess of 500,000 ounces for the year
* AISC of US$880 per ounce sold was 6% below Q3 2017, 4% lower than Q2 2018
(US$918/oz) and 10% lower than Q1 2018 (US$976/oz), and is now tracking
towards the lower end of the full-year guidance range of US$935-985 per
ounce
Financial Highlights
* Q3 2018 revenue of US$165.6 million, 3% (US$5.0 million) lower than Q3 2017
due to lower realised gold prices and lower production
* EBITDA1 of US$44.6 million for the quarter, 11% down from Q3 2017 mainly
due to lower revenue
* Net earnings of US$11.9 million (US2.9 cents per share), 26% down from
US$16.0 million (US3.9 cents per share) in Q3 2017
* Cash generated from operating activities for the quarter of US$33.6 million
was US$56.4 million higher than Q3 2017, mainly due to negative working
capital outflows (US$65.3 million) which impacted Q3 2017
* Net cash1 of US$74 million, an increase of US$11 million during the quarter
and an increase of US$65 million for the first 9 months of the year
* Cash balance was broadly flat on the prior quarter at US$117 million,
including a loan repayment of US$14 million during the quarter
* Paid corporate income tax relating to North Mara of US$9.6 million,
bringing year-to-date corporate tax paid to US$32.9 million that was fully
offset against the VAT receivable
Three months ended 30 Nine months ended 30
September September
(Unaudited) 2018 2017 2018 2017
Gold production (ounces) 136,640 191,203 391,399 619,406
Gold sold (ounces) 135,875 132,787 386,920 445,225
Cash cost (US$/ounce)1 670 616 690 588
AISC (US$/ounce)1 880 939 922 907
Net average realised gold price (US$/ 1,211 1,279 1,287 1,248
ounce)1
(in US$'000)
Revenue 165,642 170,602 499,024 562,266
EBITDA 1 44,562 50,302 178,132 211,717
Adjusted EBITDA1 44,562 76,695 136,162 242,914
Net earnings 11,850 16,038 42,727 78,581
Basic earnings per share (EPS) 2.9 3.9 10.4 19.2
(cents)
Adjusted net earnings1 34,513 100,419
11,850 25,369
Adjusted net earnings per share 2.9 8.4 6.2 24.5
(AEPS) (cents)1
Cash generated from/ (used in) 33,632 (22,784) 92,498 (21,469)
operating activities
Capital expenditure2 23,001 35,619 74,287 128,075
Cash balance 95,321 95,321
117,036 117,036
Total borrowings 71,000 71,000
42,600 42,600
1 These are non-IFRS measures. Refer to page 16 for definitions.
2 Excludes non-cash capital adjustments (reclamation asset adjustments) and
include finance lease purchases and land purchases recognised as long term
prepayments.
Other Developments
Board Changes
During the quarter Acacia announced that Mr Kelvin Dushnisky had tendered his
resignation as a non-executive director of Acacia, effective as at 31 August
2018, and from his position as Chair of the Board. This was further to the
announcements made on 23 July 2018 by Barrick Gold Corporation ("Barrick") and
by AngloGold Ashanti Limited ("AngloGold Ashanti"), respectively, of Kelvin's
departure from Barrick as at the end of August 2018, and his appointments as
CEO and as an Executive Director of AngloGold Ashanti, effective 31 August
2018.
Further to Kelvin's resignation, the Board of Acacia appointed Rachel English,
previously one of Acacia's Independent Non-Executive Directors, as Interim
Chair of the Board, with effect from 31 August 2018. The Company has commenced
a search process for a new permanent Chair of the Board.
Update on Discussions between Barrick and the Government of Tanzania ("GoT")
Acacia continues to engage with Barrick to seek to understand Barrick's
expectations for the future conduct and a timetable for the completion of its
direct discussions with the GoT. While the Company remains excluded from these
discussions, Acacia is not aware of any material developments or progress in
the direct discussions and engagements between the GoT and Barrick through the
quarter.
Any proposal received by Acacia in the future for a comprehensive resolution of
the Company's disputes with the GoT that might be agreed in principle between
Barrick and the GoT as a result of any such future discussions will be subject
to review by the Independent Committee of the Acacia Board of Directors.
Operating Environment
Through the quarter, and over the first three weeks of October, our businesses
and people in Tanzania have been exposed to an increasingly challenging
operating environment, including ad hoc reviews of historical environmental
issues at North Mara, a series of investigations and demands imposed on our
people and businesses across a number of issues, and culminating in criminal
charges being brought against our people and group companies over the past week
(see below). Each of the recent charges relate to matters which are subject to
or have been introduced into the existing contractual arbitrations with the GoT
(see below). The Company is currently considering its legal position and is
concerned about the increasing risks to the safety and security of its people.
International Arbitration
A negotiated resolution remains the preferred outcome to the Company's on-going
disputes with the GoT.
In 2017, Bulyanhulu Gold Mine Limited ("BGML"), the owner and operator of the
Bulyanhulu mine, and Pangea Minerals Limited ("PML"), the owner and operator of
the Buzwagi mine each referred their disputes with the GoT to arbitration in
accordance with the dispute resolution processes agreed by the GoT in its Mine
Development Agreements with BGML and PML. The commencement of arbitration by
BGML and PML was necessary to protect their respective rights and interests and
to promote a sustainable resolution of disputes.
These contractual arbitration processes have continued through 2018, with a
number of necessary procedural steps and with the GoT fully participating,
including service of its defence last week. Each of the charges brought by the
Government against Group companies and the Group's current and former employees
to date relate to matters which are subject to or have been introduced into
these existing contractual arbitrations with the GoT.
The Company notes that in light of the increasingly challenging operating
environment, including the recent criminal charges, it will be reaching out
directly to the Government to seek the opportunity for direct dialogue
regarding our ongoing disputes, and the disputes between BGML, PML and NMGML,
and also to inform the Government that failing a negotiated resolution the
Company may need to pursue claims under the bilateral investment treaty between
the United Republic of Tanzania and the United Kingdom.
Merger Announcement by Barrick and Randgold Resources
The Company notes the 24 September 2018 announcement by Barrick and Randgold
Resources Limited ("Randgold") regarding a potential merger between the two
companies. The Company has further noted that the potential transaction will be
subject to the approval of both Barrick and Randgold shareholders in separate
shareholder meetings to be held on or around 5 November 2018, and is expected
to be effective by Q1 2019, subject to the satisfaction or waiver of all
relevant conditions.
In Barrick's announcement on 24th September 2018, and its Circular to
shareholders issued on 4th October 2018, Barrick referred to the Company's
rights under its Relationship Agreement with Barrick with respect to the
Proposal and to any future Barrick proposal to carry on gold or silver
exploration activities in Africa, or any future Barrick proposal to acquire an
African gold or silver mining business ("Pre-emption Rights").
The Company further notes that, following due consideration by a committee of
its independent directors and with its advisors, the Company has advised
Barrick that the Company will not exercise its Pre-emption Rights in respect of
Randgold. The Company has reserved its position on the exercise of the
Pre-emption Rights with respect to any future proposals by Barrick to acquire
or increase any African gold or silver mining or exploration rights,
irrespective of scale, that Barrick might consider in the future and in respect
of which the Company's Pre-emptions Rights apply.
Update on Nyanzaga Project
On 6 September 2018, the Tanzanian Fair Competition Commission ("FCC") granted
its approval for OreCorp Tanzania Limited (OreCorp Tanzania) to increase its
interest in Nyanzaga Mining Company Limited ("NMCL") to 51%. This move remains
subject to: (i) the approval of the newly established Mining Commission, the
application for which was lodged at the same time as the application for FCC
approval; and (ii) the future payment of US$3 million to the Acacia Group.
In addition, members of the OreCorp Group have now entered into a completion
agreement with Acacia and other members of the Acacia Group to allow OreCorp
Tanzania to move to 100% ownership of NMCL, and thereby 100% ownership of the
Nyanzaga Gold Project (Project). This move remains subject to: (i) the
Tanzanian regulatory approvals referred to above; (ii) the grant of the Special
Mining Licence (SML) in respect of the Project; and (iii) the making of a
future payment of US$7 million to the Acacia Group. Following completion Acacia
will retain a net smelter return production royalty over the Project, capped at
US$15 million.
Both OreCorp and Acacia believe that a simplified ownership structure of NMCL
is beneficial to the future development of the Project and would enable it to
be best placed to provide significant benefits to Tanzania and all
stakeholders.
Asset Level Discussions with Chinese Interested Parties
As announced in February 2018, in response to a number of indicative
expressions of interest to Acacia from Chinese companies,, the Company has
engaged with a small number of parties to explore the potential sale of a stake
in one or more of its Tanzanian assets. Noting some media reports published
during the third quarter, Acacia confirms that the Company is not aware of any
new material information regarding the future ownership of Acacia, any of its
Tanzanian businesses or regarding Barrick's intentions for its 64% stake in the
Company. Given that the timetable and successful completion of any discussions
in relation to any such transaction are likely to be inextricably linked to the
Company's ability to reach a comprehensive agreement with the GoT in order to
settle historic disputes and provide a stable future operating environment, no
significant progress is expected to be made on a potential transaction until
there is a clearer picture of the likely outcomes of Barrick's discussions with
the GoT.
Acacia remains committed to shareholder value and evaluates all opportunities
against strict strategic and financial criteria. Any transaction will be
pursued only if it is determined by Acacia's Board to be in the best interests
of the Company. There is currently no certainty as to whether any agreement
will be reached with any of the potential investors.
Bulyanhulu Reduced Operations and Optimisation Study Update
In Q3 2017, Acacia took the decision to place Bulyanhulu on reduced operations
("ROP") due to the unsustainable losses experienced at the mine due to the
inability to export concentrate. This process was completed in Q4 2017. During
Q3 2018, reduced operating costs amounted to US$6.6 million, compared to
US$16.6 million in H1 2018, and mainly consisted of site overhead costs
including labour, power, camp related costs, security costs and on-going
maintenance related work.
Acacia has been taking the opportunity to progress essential capital spend of
approximately US$7 million in 2018, primarily on the process plant, together
with an optimisation study which is designed to ensure that when the mine
restarts it does so in an optimised manner. The study work is progressing and
is on track to be completed in early Q1 2019. Preliminary indications from the
study suggest a focus on more continuous higher grade ore and therefore higher
margin ounces which consequently may lead to a smaller initial reserve base
than currently estimated. We expect to be in a position to provide further
details during Q1 2019.
Contribution to Tanzania
Since the inception of its businesses, over 15 years ago, the Acacia Group and
its predecessors have invested over US$4 billion into Tanzania and paid over
US$1 billion in taxes and royalties. We remain committed to supporting efforts
towards Tanzania's socio-economic advancement, including the realisation of the
Government's Development Vision 2025.
As at the end of Q3 2018, Acacia had paid a total of US$97.9 million in taxes
and royalties in the year to date. This is made up of provisional corporate tax
payments for the year of US$28.7 million, a final 2017 corporate tax payment of
US$4.2 million, royalties of US$38.4 million, payroll taxes of US$18.5 million
and other taxes of US$8.2 million.
During the quarter, our Sustainable Communities initiatives contributed to
tangible benefits for the local communities around our operations with the
completion of a number of community projects supporting advancements in water
and sanitation, education, health, and local infrastructure.
In July 2018 the Tanzanian Prime Minister officially opened Acacia-funded
facilities in the locality of our Buzwagi mine, including the Mwendakulima
Health Centre, the Kahama football stadium and a new girls' dormitory block at
a local secondary school. Meanwhile our Bulyanhulu mine entered into an
agreement with the local district council to contribute US$250,000 towards the
construction of 32 medical dispensaries in support of the Government's health
agenda for the region.
In late September, a national disaster saw the MV Nyerere ferry sink on Lake
Victoria tragically claiming over 228 lives. Acacia donated 80 million
Tanzanian shillings (approximately US$35,000) to the GoT in support of relief
efforts. We also sent a team to assist in the rescue mission, as well as
providing other support and medical equipment.
In terms of our daily operations in Tanzania, Acacia continues to progress a
number of strategies within its Supply Chain function with a view to further
increasing its annual spend with Tanzanian-owned businesses. Acacia has always
maintained a policy of sourcing local first, where viable, and the plans form
part of our continued efforts to grow our annual local spend. Based on our
current plans, we expect that by Q1 2019 we will achieve a further 10% increase
in our total annual spend with suppliers that are Tanzanian-owned. This will
take the Group's annual spend with Tanzanian-owned businesses on goods and
services - including construction materials, fuel and lubricants, as well as
internet and security services - to US$170 million. Furthermore, if the
Bulyanhulu mine were to restart in the future, and run at full capacity, we
expect a significant further increase in our annual local spend. From 2016 to
date the Acacia Group has spent US$500 million with Tanzanian-owned suppliers.
Indirect Taxation Update
The net indirect tax receivables balance increased during Q3 2018 from US$172.5
million at 30 June 2018 to US$175.2 million at 30 September 2018. This increase
was driven by a further US$13.5 million of VAT outflows, for which no cash VAT
refunds were received, offset by our third provisional corporate tax payment
for 2018 relating to North Mara of US$9.6 million and foreign exchange
revaluation losses and other adjustments of US$1.2 million. The provisional
corporate tax payments have been offset against indirect tax receivables in
line with an existing agreement with the Tanzanian Revenue Authority.
As previously disclosed, Tanzania's new mining legislation includes an
Amendment to the VAT Act 2015 to the effect that no input tax credit can be
claimed for the exportation of "raw minerals", with effect from 20 July 2017.
Bulyanhulu, Buzwagi and North Mara have each received notices from the Tanzania
Revenue Authority that they are not eligible for any VAT relief from July 2017
onwards on the basis that all production (both doré and concentrate)
constitutes "raw minerals" for this purpose. The total VAT claims submitted
since July 2017 amount to approximately US$76 million. We have disputed this
interpretation of the legislation as a matter of Tanzanian law, while this is
also a matter that is in contravention of the relevant terms of our MDAs with
the GoT and subject to our on-going disputes with the GoT.
Recent Charges Brought by the Tanzanian Prevention and Combating of Corruption
Bureau ("PCCB") Against Current and Former Employees
Post-period end, on 10 October 2018, one of the Group's employees in Tanzania,
a South African national, was charged by the Tanzanian Prevention and Combating
of Corruption Bureau (PCCB) with an offence under the Tanzanian Prevention and
Combating of Corruption Act. The employee has pleaded not guilty, and been
granted bail. The charges relate to the historical activities of a Land Task
Force (LTF) conceived and agreed between the GoT and North Mara Gold Mine
Limited (NMGML) in 2012 to create a transparent, safe, fair and inclusive
process for valuing land that might be purchased by agreement around the North
Mara mine, and which operated between 2013 and 2015.
The Company notes that the employee who has been charged was not involved in
the LTF process, and appears to have been charged due to his being responsible
for signing cheques for approved payments made by NMGML at the time, including
a cheque regarding the agreed LTF process in 2013. Two former government
officials were charged in connection with receiving funds paid by NMGML through
the same transaction, while a former employee of NMGML, who left the Group in
2013, was named in connection with the transaction but the Company does not
believe he has been charged.
The Company further notes that the PCCB laid additional charges against a
number of government officials in connection with their relationships with
NMGML and North Mara, one of which also relates to the LTF exercise, but no
further charges were laid against NMGML or any other of the Group's employees.
The Company notes that historical allegations and issues around the creation
and implementation of the LTF at North Mara from 2013 to 2015 have been
subsequently investigated over the past four years, including by the PCCB
itself since early 2017, and NMGML and the Company have been working with and
assisting the responsible authorities throughout.
Also post period-end the Company announced on 17 October that a current and a
former employee of its Tanzanian businesses, together with three individual
companies, were charged by the PCCB with a number of different offences
including breaches of the Tanzanian Anti-Money Laundering Act. Each of the
companies and both the current employee and the former employee have pleaded
not guilty to all charges. The Company notes with concern that under Tanzanian
law offences under the Anti-Money Laundering Act are not bailable, and,
accordingly, the accused have not been released on bail.
The Company is in the process of analysing the charges brought by the PCCB, and
will be able to comment further once more details are known. A total of 39
charges have been brought, either against the current and the former employee
and/or against one or more of the Company's operating subsidiaries in Tanzania,
Pangea Minerals Limited ("PML"), Bulyanhulu Gold Mine Limited ("BGML") and
North Mara Gold Mine Limited ("NMGML"), as well as a Canadian company,
Explorations Minieres du Nord Ltd. The majority of the 39 charges and
allegations brought by the PCCB appear to relate to the historical structuring
and financing of PML, BGML and NMGML dating back as far as 2008, prior to the
creation of the Acacia Group. The charges are wide ranging and include: tax
evasion; conspiracy; a charge under organised crime legislation; forgery; money
laundering and corruption.
The great majority of the allegations in the criminal proceedings by the GoT
relate to matters already being considered in the arbitrations commenced by
BGML and PML in July 2017 regarding their disputes with the GoT under their
respective MDAs, which are progressing towards a hearing and in which the GoT
are fully participating.
As the Company has previously announced, the PCCB have been reported in
Tanzanian media to have stated that the arrests and charges on 17th October
formed part of their "ongoing investigation into natural resources
exploitation" and as part of the "war that the government is waging in the
Minerals sector", and alleged that the two people arrested and later charged
had "occasioned the Government losses". Acacia is committed to running its
business to the highest ethical standards and is taking these matters extremely
seriously.
Outlook
We are pleased to report a strong operational performance for the year to date,
delivering 391,000 gold ounces in the nine months to the end of September 2018.
As a result, we expect to exceed the upper end of our full year production
guidance range of 435,000 to 475,000 ounces and are now targeting production to
be marginally in excess of 500,000 ounces for the full year.
In line with our clear cost reduction strategy, we have also steadily reduced
our costs throughout the year and are now tracking towards the lower end of our
AISC guidance range of US$935-985 per ounce and cash costs per ounce of between
US$690-720 per ounce. Year to date capital expenditure amounted to US$74
million, in line with expectations, and we continue to expect full year group
capital expenditure of approximately US$100 million. While the strong
operational performance through the quarter has demonstrated the operating
resilience of our businesses and our people, the Company is, however, concerned
regarding the increasingly challenging operating environment and the increasing
risks to the safety and security of itspeople. The Company is seeking to
engage with Barrick to understand how the recent significant escalations of
Government actions against BGML, NMGML and PML and employees will be taken into
account in any further direct discussions between Barrick and the GoT. Pending
any comprehensive and sustainable resolution of the situation, the Company and
Group companies will continue to seek to protect the interests of all
stakeholders through the existing contractual arbitrations, and through direct
engagements with the Government in the context of the Company's bilateral
investment treaty rights.
Key Statistics Three months ended Nine months ended
30 September 30 September
(Unaudited) 2018 2017 2018 2017
Tonnes mined Kt 4,416 8,608 12,601 26,647
Ore tonnes mined Kt 1,085 4,221 2,764 11,433
Ore tonnes processed incl. Kt 2,373 2,004 6,943 6,864
tailings reclaim
Process recovery rate incl. % 87.3% 90.9% 87.1% 90.0%
tailings reclaim
Head grade incl. tailings g/t 2.1 3.3 2.0 3.1
reclaim
Ore tonnes processed excl. Kt 1,875 1,922 5,541 5,959
tailings reclaim
Process recovery rate excl. % 92.4% 91.7% 91.8% 92.7%
tailings reclaim
Head grade excl. tailings g/t 2.3 3.3 2.2 3.4
reclaim
Gold production oz 136,640 191,203 391,399 619,406
Gold sold oz 135,875 132,787 386,920 445,225
Copper production Klbs - 3,832 - 12,897
Copper sold Klbs - 37 - 1,341
Cash cost per tonne milled excl. US$/t 46 41 46 42
tailings reclaim1
Cash cost per tonne milled incl. US$/t 38 41 38 38
tailings reclaim1
Per ounce data
Average spot gold price2 US$/oz 1,213 1,278 1,282 1,251
Net average realised gold US$/oz 1,211 1,279 1,287 1,248
price1
Total cash cost1 US$/oz 670 616 690 588
All-in sustaining cost1 US$/oz 880 939 922 907
Average realised copper price US$/ - 2.68 - 2.98
lbs
Financial results
Three months ended Nine months ended
30 September 30 September
(Unaudited, in US$'000 unless otherwise 2018 2017 2018 2017
stated)
Revenue 165,642 170,602 499,024 562,266
Cost of sales (113,119) (105,538) (334,345) (349,505)
Gross profit 52,523 65,064 164,679 212,761
Corporate administration (6,336) (6,780) (17,640) (19,300)
Share based payments (177) 637 1,229 8,422
Exploration and evaluation costs (3,350) (5,295) (10,581) (21,445)
Corporate social responsibility expenses (2,130) (2,120) (5,213) (5,859)
Impairment charges - - (24,234) -
Other charges (16,945) (24,186) (20,566) (43,803)
Profit before net finance expense and 23,585 27,320 87,674 130,776
taxation
Finance income 234 261 1,042 1,804
Finance expense (2,172) (2,982) (10,412) (8,436) Profit before taxation 21,647 24,599 78,304 124,144 Tax expense (9,797) (8,561) (35,577) (45,563) Net profit for the period 11,850 16,038 42,727 78,581 1 These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to "Non IFRS measures" on page 16 for definitions. 2 Reflect the London PM fix price. For further information, please visit our website: www.acaciamining.com or contact: Acacia Mining plc +44 (0) 207 129 7150 Peter Geleta, Chief Executive Officer Jaco Maritz, Chief Financial Officer Sally Marshak, Head of Investor Relations and Communications Camarco +44 (0) 20 3757 4980 Gordon Poole / Nick Hennis About Acacia Mining plc Acacia Mining plc (LSE:ACA) is the UK holding company of the Acacia Group, Tanzania's largest gold miner and one of the largest producers of gold in Africa. The Acacia Group has three mines, all located in north-west Tanzania: Bulyanhulu, which is owned and operated by Bulyanhulu Gold Mine Limited, Buzwagi, which is owned and operated by Pangea Minerals Limited and North Mara, which is owned and operated by North Mara Gold Mine Limited. The Acacia Group also has a portfolio of exploration projects in Kenya, Burkina Faso and Mali. Acacia is a UK public company headquartered in London. We are listed on the Main Market of the London Stock Exchange with a secondary listing on the Dar es Salaam Stock Exchange. Barrick Gold Corporation is our majority shareholder. Acacia reports in US dollars and in accordance with IFRS as adopted by the European Union, unless otherwise stated in this announcement. Conference call A conference call on our Q3 results will be held for analysts and investors at 09:00 BST today. The access details for the conference call are as follows: Participant dial in: +44 (0)20 3936 2999 Participant access code: 30 43 00 A replay of the call will be available for 7 days Replay dial in: + 44 (0)20 3936 3001 Access code: 772251 FORWARD- LOOKING STATEMENTS This report includes "forward-looking statements" that express or imply expectations of future events or results. Forward-looking statements are statements that are not historical facts. These statements include, without limitation, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future production, operations, costs, projects, and statements regarding future performance. Forward-looking statements are generally identified by the words "plans," "expects," "anticipates," "believes," "intends," "estimates" and other similar expressions. All forward-looking statements involve a number of risks, uncertainties and other factors, many of which are beyond the control of Acacia, which could cause actual results and developments to differ materially from those expressed in, or implied by, the forward-looking statements contained in this report. Factors that could cause or contribute to differences between the actual results, performance and achievements of Acacia include, but are not limited to, changes or developments in political, economic or business conditions or national or local legislation or regulation in countries in which Acacia conducts - or may in the future conduct - business, industry trends, competition, fluctuations in the spot and forward price of gold or certain other commodity prices (such as copper and diesel), currency fluctuations (including the US dollar, South African rand, Kenyan shilling and Tanzanian shilling exchange rates), Acacia's ability to successfully integrate acquisitions, Acacia's ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves, and to process its mineral reserves successfully and in a timely manner, Acacia's ability to complete land acquisitions required to support its mining activities, operational or technical difficulties which may occur in the context of mining activities, delays and technical challenges associated with the completion of projects, risk of trespass, theft and vandalism, changes in Acacia's business strategy including, the on-going implementation of operational reviews, as well as risks and hazards associated with the business of mineral exploration, development, mining and production and risks and factors affecting the gold mining industry in general. Although Acacia's management believes that the expectations reflected in such forward-looking statements are reasonable, Acacia cannot give assurances that such statements will prove to be correct. Accordingly, investors should not place reliance on forward-looking statements contained in this report. Any forward-looking statements in this report only reflect information available at the time of preparation. Save as required under the Market Abuse Regulation or otherwise under applicable law, Acacia explicitly disclaims any obligation or undertaking publicly to update or revise any forward-looking statements in this report, whether as a result of new information, future events or otherwise. Nothing in this report should be construed as a profit forecast or estimate and no statement made should be interpreted to mean that Acacia's profits or earnings per share for any future period will necessarily match or exceed the historical published profits or earnings per share of Acacia. Operating Review The Group achieved gold production for the third quarter of 136,640 ounces, ahead of both production in Q1 2018 (120,981 ounces) and Q2 2018 (133,778 ounces), and demonstrating a consistently strong production performance in the year to date. Although, on a year on year basis, Q3 2018 production was 29% lower than Q3 2017 (191,203 ounces), this was primarily attributable to the move to reduced operations at Bulyanhulu and to stockpile processing at Buzwagi in 2018. This was partly offset by higher gold production at North Mara driven by higher head grades. Production for the quarter exceeded management expectations due to strong production performances across all three sites. Gold sold for the quarter of 135,875 ounces was broadly in line with production. North Mara's production of 89,287 gold ounces for the quarter was 24% higher than Q3 2017 (72,011 ounces) mainly due to 24% higher head grades compared to Q3 2017, primarily driven by higher grade ore received from the eastern part of the Nyabirama open pit. Gold sold of 89,475 ounces for the quarter was in line with production and 20% higher than in Q3 2017. AISC of US$814 per ounce sold was 6% lower than in Q3 2017 (US$864/oz) as a result of higher production, partly offset by higher cash costs. At Buzwagi, gold production of 36,460 ounces for Q3 2018 was 47% lower than in Q3 2017 (69,097 ounces), as a result of the mine transitioning to a lower grade stockpile processing operation in 2018 in line with its remaining life of mine plan. Mining of the final cut of higher grade ore at the bottom of the pit commenced during the quarter, resulting in slightly higher than expected production, and is due to be completed in Q4. Gold sold for the quarter of 35,570 ounces was in line with production and 11% higher than Q3 2017 due to the inability to sell concentrate following the export ban which partially impacted Q3 2017 and the decision, taken in September 2017, to produce gold solely in doré form going forward. AISC per ounce sold of US$1,018 was 46% higher than Q3 2017, mainly driven by higher cash costs due to the lower production base and drawdown in ore inventory as a result of lower grade stockpile processing, partly offset by lower sustaining capital spend and lower corporate administration cost allocations. Bulyanhulu produced 10,893 gold ounces for the quarter, 78% below Q3 2017 (50,094 ounces). During the quarter all production continued to be produced from the retreatment of tailings as a result of the underground mine being placed on reduced operations in late 2017. Gold sold for the quarter of 10,830 ounces was in line with production. AISC per ounce sold for the quarter of US$727 was 47% lower than Q3 2017 (US$1,365/oz) driven by reduced capital and operating spend, partly offset by the lower production base, but excludes reduced operations costs of US$6.6 million. Total tonnes mined during the quarter were 4.4 million tonnes, 49% lower than Q3 2017, mainly as a result of the transition to a stockpile processing operation at Buzwagi and the halting of all underground mining at Bulyanhulu. Tonnes mined at North Mara were in line with the prior year. Total ore tonnes mined of 1.1 million tonnes were 74% lower than Q3 2017, primarily due to the cessation of mining activities at Buzwagi and Bulyanhulu, although 0.2 million tonnes was mined at Buzwagi. Ore tonnes processed for the quarter of 2.4 million tonnes were 18% higher than the comparative period in 2017, mainly driven by the higher tonnes processed at Bulyanhulu, after production from reprocessed tailings was temporarily halted due to water shortages in Q3 2017, as well as higher tonnes processed at Buzwagi. Head grade for the quarter (excluding tailings retreatment) of 2.3g/t, was 30% lower than Q3 2017 (3.3g/t) due to the lower grade stockpile processing at Buzwagi, partly offset by higher head grades at North Mara as a result of higher grades received from the open pit mine. Cash costs of US$670 per ounce sold for the quarter were 9% higher than in Q3 2017, primarily due to: * The drawdown of ore stockpiles at Buzwagi and a lower build-up in finished
gold inventory compared to Q3 2017 (US$390/oz), given Q3 2017 was impacted
by the build- up of finished gold inventory as a result of the concentrate
export ban.
This was partly offset by:
* Savings in direct mining costs (US$311/oz) driven by the cessation of
mining activities at Buzwagi and Bulyanhulu, partly offset by higher direct
mining costs at North Mara, and lower sales related costs (US$5/oz) driven
by lower sales volumes; and
* The higher production base at North Mara (US$14/oz).
All-in sustaining cost of US$880 per ounce sold for the quarter was 6% lower
than in Q3 2017, mainly due to lower capitalised development costs relating to
Bulyanhulu and North Mara (US$84/oz) and the lower sustaining capital spend at
Bulyanhulu and Buzwagi (US$21/oz), partly offset by higher cash costs (refer to
above) (US$54/oz).
Cash generated from operating activities totalled US$33.6 million for the
quarter, an increase of US$56.4 million over Q3 2017 (US$22.8 million outflow),
and was mainly due to negative working capital outflows (US$65.3 million) which
impacted Q3 2017 relating to the build-up of concentrate stock on hand, partly
offset by lower EBITDA (US$5.7 million).
Capital expenditure for the quarter amounted to US$23.0 million compared to
US$35.6 million in Q3 2017, a decrease of 35%. Capital expenditure primarily
comprised of capitalised development and waste stripping (US$11.3 million),
mobile equipment and component change-outs (US$3.5 million) and capitalised
drilling (US$2.8 million), all at North Mara, as well as the Bulyanhulu
optimisation study costs (US$0.9 million), asset integrity work to Bulyanhulu's
processing facilities (US$0.7 million) and the investment in Buzwagi's tailing
storage facility (US$0.3 million).
Mine Site Review
North Mara
Key statistics
Three months ended 30 Nine months ended
September 30 September
(Unaudited) 2018 2017 2018 2017
Key operational information:
Ounces produced oz 89,287 72,011 251,976 251,589
Ounces sold oz 89,475 74,585 248,345 252,715
Cash cost per ounce sold1 US$/oz 572 550 582 473
AISC per ounce sold1 US$/oz 814 864 871 774
Open pit:
Tonnes mined Kt 4,035 3,977 11,849 11,727
Ore tonnes mined Kt 713 813 2,021 2,349
Mine grade g/t 2.0 1.6 2.0 1.8
Underground:
Ore tonnes trammed Kt 202 185 573 501
Mine grade g/t 7.4 7.9 7.8 8.6
Processing information:
Ore milled Kt 709 714 2,119 2,133
Head grade g/t 4.2 3.4 4.0 4.0
Mill recovery % 93.2% 91.5% 92.8% 92.2%
Cash cost per tonne milled1 US$/t 72 57 68 56
Capital Expenditure
- Sustaining capital2 US$ 6,303 5,016 19,984 17,193
('000)
- Capitalised development US$ 11,258 14,456 39,190 47,738
('000)
- Expansionary capital US$ 2,780 2,442 6,448 6,931
('000)
20,341 21,914 65,622 71,862
- Non-cash reclamation asset US$ (1,254) 430 (2,419) 374
adjustments ('000)
Total capital expenditure US$ 19,087 22,344 63,203 72,236
('000)
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to 'Non-IFRS measures" on page 16 for definitions.
2 Includes land purchases recognised as long term prepayments.
Operating performance
Gold production for the quarter of 89,287 ounces was 24% higher than Q3 2017
(72,011 ounces), driven by 24% higher head grades as a result of higher grades
received from the eastern part of Nyabirama open pit and the impact of good
plant recovery rates. Gold ounces sold for the quarter of 89,475 ounces was
broadly in line with production and 20% higher than in Q3 2017.
Cash costs of US$572 per ounce sold were 4% higher than Q3 2017 (US$550/oz),
mainly driven by higher direct mining costs (US$96/oz), largely due to lower
capitalised stripping costs driven by a lower strip ratio in Nyabirama pit
Stage 4, higher consumables, maintenance and external services costs; as well
as higher sales-related costs linked to the increase in the royalty rate and
the higher sales base (US$21/oz). This was partly offset by the higher
production base (US$91/oz).
AISC of US$814 per ounce sold was 6% lower than in Q3 2017 (US$864/oz)
primarily as a result of the positive impact of higher sales volumes on
individual cost items (US$52/oz) and lower capitalised stripping costs driven
by a lower strip ratio in Nyabirama pit Stage 4 (US$36/oz), partly offset by
higher cash costs discussed above (US$22/oz) and higher sustaining capital
spend (US$14/oz).
Total tonnes mined of 4.2 million tonnes were in line with Q3 2017. Waste
tonnes moved were 5% higher than the prior year quarter and ore tonnes mined
were 8% below 2017, driven by lower ore tonnes mined at the open pit.
We continued to undertake drilling programmes at Gokona during the period as we
look to demonstrate the long term potential of the deposit, while a
pre-feasibility study is underway at Nyabirama in tandem with the permitting
for an underground exploration decline as we explore the potential for a second
underground mine at North Mara (refer to the Exploration Review section for
more detail).
Capital expenditure for the period before reclamation adjustments amounted to
US$20.3 million, 7% lower than in Q3 2017 (US$21.9 million). Key capital
expenditure included capitalised stripping costs (US$6.8 million), capitalised
underground development costs (US$4.5 million), capitalised drilling mainly for
reserve and resource development at Gokona underground (US$2.8 million),
investment in mobile equipment and component change-outs (US$3.5 million) and
investment in fixed equipment and infrastructure (US$0.9 million).
Buzwagi
Key statistics
Three months ended 30 Nine months ended
September 30 September
(Unaudited) 2018 2017 2018 2017
Key operational information:
Ounces produced oz 36,460 69,097 109,560 195,181
Ounces sold oz 35,570 31,938 107,875 85,032
Cash cost per ounce sold1 US$/oz 950 564 960 647
AISC per ounce sold1 US$/oz 1,018 695 1,031 742
Copper production Klbs - 2,738 - 8,991
Copper sold Klbs - 47 - 752
Mining information:
Tonnes mined Kt 179 4,259 179 13,823
Ore tonnes mined Kt 170 3,037 170 7,988
Processing information:
Ore milled Kt 1,165 1,020 3,421 3,215
Head grade g/t 1.1 2.2 1.1 2.0
Mill recovery % 90.5% 94.0% 89.7% 95.7%
Cash cost per tonne milled1 US$/t 29 18 30 17
Capital Expenditure
- Sustaining capital US$ 686 2,238 2,867 3,103
('000)
- Non-cash reclamation asset US$ (338) 215 34 214
adjustments ('000)
Total capital expenditure US$ 348 2,453 2,901 3,317
('000)
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to "Non-IFRS measures" on page 16 for definitions.
Operating performance
Gold production for the quarter of 36,460 ounces was 47% lower than the
comparative period in 2017 as a result of Buzwagi transitioning primarily to a
lower grade stockpile processing operation compared to the processing of
run-of-mine ore in the previous period. Mining of the final cut of higher grade
ore at the bottom of the pit commenced during the quarter, resulting in
slightly higher than expected production, and is due to be completed in Q4.
Gold sold for the quarter of 35,570 ounces was in line with production and 11%
higher than Q3 2017 due to the inability to sell concentrate following the
export ban which partially impacted Q3 2017 and the decision, taken in
September 2017, to produce gold solely in doré form going forward.
Cash costs for the quarter of US$950 per ounce sold were 68% higher than Q3
2017 (US$564/oz) due to the higher average cost valuation relating to the
drawdown of lower grade stockpiles compared to the higher grade mining ounces
in Q3 2017.
AISC per ounce sold of US$1,018 was 46% higher than Q3 2017 of US$695/oz,
primarily driven by higher cash costs as explained above (US$386/oz), partly
offset by lower sustaining capital spend (US$44/oz) and lower corporate cost
allocations (US$16/oz).
Capital expenditure before reclamation adjustments amounted to US$0.7 million,
69% lower than Q3 2017 (US$2.2 million), mainly consisting of processing
facilities upgrades (US$0.4 million) and the expansion of the tailings storage
facilities which started late in 2017 (US$0.3 million).
Bulyanhulu
Key statistics
Three months ended 30 Nine months ended
September 30 September
(Unaudited) 2018 2017 2018 2017
Key operational information:
Ounces produced oz 10,893 50,094 29,863 172,636
Ounces sold oz 10,830 26,265 30,700 107,479
Cash cost per ounce sold1 US$/oz 564 863 617 812
AISC per ounce sold1 US$/oz 727 1,365 792 1,346
Copper production Klbs - 1,095 - 3,906
Copper sold2 Klbs - (11) - 588
Run-of-mine:
Underground ore tonnes hoisted Kt - 187 - 596
Ore milled Kt - 189 - 612
Head grade g/t - 9.0 - 8.6
Mill recovery % - 88.9% - 90.1%
Ounces produced oz - 48,683 - 153,279
Cash cost per tonne milled1 US$/t - 104 - 124
Reprocessed tailings:
Ore milled Kt 498 82 1,402 905
Head grade g/t 1.3 1.3 1.2 1.4
Mill recovery % 53.3% 42.0% 53.7% 46.8%
Ounces produced oz 10,893 1,411 29,863 19,356
Capital Expenditure
- Sustaining capital US$ 506 2,881 2,615 11,480
('000)
- Capitalised development US$ - 8,152 - 39,206
('000)
- Expansionary capital US$ 1,385 57 2,919 1,039
('000)
1,891 11,090 5,534 51,725
- Non-cash reclamation asset US$ (1,394) 386 (3,140) 577
adjustments ('000)
Total capital expenditure US$ 497 11,476 2,394 52,302
('000)
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to 'Non-IFRS measures" on page 16 for definitions.
2 Negative sales quantities in 2017 relate to the reversal of sales recorded
during Q3 2017.
Operating performance
Gold production for Q3 2018 of 10,893 ounces was 78% lower than the same period
in 2017 as a result of the decision to transition to reduced operations at
Bulyanhulu. Production consisted solely of the reprocessing of tailings and was
9,482 ounces higher than Q3 2017 which was negatively impacted by a drought in
the Kahama district and resulted in a temporary halt in production. Gold sold
for the quarter of 10,830 ounces was 59% lower than Q3 2017 but in line with
the lower production base.
Cash costs of US$564 per ounce sold were 35% lower than Q3 2017 (US$863),
mainly due to lower direct mining costs compared to the prior year period as a
result of Bulyanhulu being on reduced operations as well as lower sales-related
costs driven by lower sales volumes and partly offset by the lower production
base.
AISC per ounce sold for the period of US$727 was 47% lower than the comparative
period in 2017 (US$1,365/oz), driven by reduced capital spend, lower operating
costs and lower corporate cost allocations, partly offset by the lower
production base, but excludes reduced operations costs of US$6.6 million for
the quarter.
Capital expenditure for the quarter before reclamation adjustments amounted to
US$1.9 million, significantly lower than Q3 2017 (US$11.1 million) due to
Bulyanhulu being on reduced operations and includes the Bulyanhulu optimisation
study costs (US$0.9 million) and asset integrity work to the processing
facilities (US$0.7 million).
Exploration Review
Brownfield Exploration
North Mara - Gokona Underground
A total of 15,929 metres of extension and infill drilling were completed by
four rigs at Gokona Underground during Q3 2018, with a further 13 holes for
3,339 metres of grade control drilling also undertaken. Drilling continued to
define the deeper parts of the Central Zone below the 1000mRL elevation; with
significant intercepts returned during the quarter including:
* UGKD494 6.0m @ 14.0 g/t Au from 165m; and
10.0m @ 5.1 g/t Au from 398m
* UGKD495 5.0m @ 12.5 g/t Au from 233m
* UGKD503 25.0m @ 4.6 g/t Au from 269m
* UGKD512 12.0m @ 4.7 g/t Au from 290m
* UGKD497 6.0m @ 18.9 g/t Au from 190m
* UGKD498 23.0m @ 5.3 g/t Au from 173m
* UGKD499 31.0m @ 7.0 g/t Au from 194m
* UGKD514 14.0m @ 7.5 g/t Au from 204m; and
9.8m @ 8.6 g/t Au from 241m; and
11.0m @ 13.7 g/t Au from 263m
* UGKD516 22.0m @ 5.0 g/t Au from 84m; and
19.0m @ 6.7 g/t Au from 222m
* UGKD525 6.0m @ 9.9 g/t Au from 361m; and
16.0m @ 5.4 g/t Au from 396m
The drilling programme also tested the deeper East Zone during the quarter,
where it has been offset to the west of the Gokona Fault. Several highly
significant intercepts were returned with numerous occurrences of visible gold;
most notably from UGKD510 intersecting 23m @ 110.2g/t Au approximately 400m
deeper than the current East Decline development.
* UGKD501 20.0m @ 5.0 g/t Au from 564m
* UGKD502 19.0m @ 8.8 g/t Au from 179m; and
7.0m @ 8.0 g/t Au from 479m; and
10.0m @ 14.1 g/t Au from 505m; and
18.0m @ 17.9 g/t Au from 537m
* UGKD509 9.0m @ 9.1 g/t Au from 214m
* UGKD510 23.0m @ 110.2 g/t Au from 426m; and
6.0m @ 14.9 g/t Au from 502m
* UGKD517 40.0m @ 4.6 g/t Au from 202m
* UGKD518 12.0m @ 5.5 g/t Au from 201m
* UGKD519 21.0m @ 19.9 g/t Au from 121m
* UGKD521 18.0m @ 5.0 g/t Au from 115m
* UGKD532 22.0m @ 4.5 g/t Au from 248m
Further deep holes are planned to be drilled into the lower East area during
Q4.
Drilling also continued to test the lower grade West Zone below the 1000mRL
elevation, with several more significant intercepts returned:
* UKGC_01074 12.0m @ 8.6 g/t Au from 125m
* UKGC_01076 10.0m @ 6.0 g/t Au from 197m; and
24.0m @ 8.7 g/t Au from 318m
* UKGC_01078 12.0m @ 10.3 g/t Au from 134m
* UKGC_01080 10.0m @ 12.0 g/t Au from 208m
* UKGC_01081 28.0m @ 3.0 g/t Au from 180m
* UKGC_01082 24.0m @ 3.3 g/t Au from 127m
* UKGC_01083 26.0m @ 3.8 g/t Au from 169m
* UKGC_01084 16.0m @ 9.0 g/t Au from 281m
Gokona Underground Diamond Drilling 2018
See www.acaciamining.com for picture
Greenfield Exploration
Acacia sees greenfield exploration as integral to our future growth strategy
and commenced an exploration portfolio review during the quarter ahead of our
2019 business planning process in order to further target and refine our
exploration spend in 2019.
Kenya
Two diamond rigs operated across the Western Kenya Project during the quarter
with 15 holes drilled totalling 5087 metres. In addition, prospect scale
geological mapping and multi-element soil geochemical surveys continued.
Liranda Corridor
In May 2017 a maiden resource of 1.31 million ounces of gold at 12.1 grams per
tonne was declared for the Isulu prospect. This resource was unconstrained.
A scoping study was completed in September 2018 and indicates a reduction in
the mineable portion of the resource to 4.7 Mt at 5.92 g/t Au (fully diluted)
containing 894 koz gold with a proposed mining scenario giving an ore
production rate of 400-500 kt/y using mechanised mining and treated through
conventional gravity and CIL processing. However, the resource can potentially
improve with further drilling and the opportunity exists for the deposit to be
mined using conventional mining methods, which are typically used in 'small
scale' mines. Therefore, Acacia will look at different options and explore the
possibility of bringing in a partner who has the necessary conventional mining
expertise to take the project forward.
The Isulu South East and GAP targets
During the quarter drill testing of the Isulu South East Prospect and the
so-called GAP target (a blind target between Isulu and Bushiangala) was
completed. The Isulu South East target was based on soil geochemistry and
structural interpretation. The GAP target followed up on a strong VTEM anomaly
pointing to a mineralised intrusive body associated with a distinct
hydrothermal leakage soil anomaly of possible pathfinder elements. The purpose
was to identify possible satellite bodies in the vicinity of a hypothetical
Isulu mine. Three diamond holes totaling 1117 metres were drilled into the
Isulu South East target and another 3 holes, totaling 1264 metres, into the GAP
target.
Mineralisation at Isulu South East is associated with sulfides (pyrite,
pyrrhotite, arsenopyrite and chalcopyrite), quartz carbonate veining, sericite
and minor green mica alteration. Assays returned broad zones of lower-grade
mineralisation including some medium-grade intervals: (1)
* LCD0206: 20.5m @ 1.13 g/t Au from 44m; 1m @ 3.68g/ Au
from 62.5m
* LCD0209: 31.8m @ 1.29g/t Au from 201m incl. 7.7m @
3.05 g/t Au from 207
* LCD0210: 13.5m @ 0.90 g/t Au from 281m incl of 1m @
7.56g/t Au from 281m
* LCD0213: 0.5m @ 1.05 g/t Au from 231.6m and 0.6m @
1.16 g/t Au from 235.5m,
1.4m @ 4.4 g/t Au from 374.6m and 0.6m @ 1.68 g/t Au from 383m
* LCD0216: 1m @1.81 g/t Au from 113.5m.
The intersected mineralisation is non-economic for an underground scenario and
drilling was stopped.
(1) The first three holes were drilled in Q2 but assays only became
available in Q3
Drilling on the GAP target started at the end of June and was completed in
August 2018. No intrusive was intersected at the modeled depth of 500 metres.
Several wide and weakly mineralised shear zones were intersected. The best
grade was LCD0214 (IBG): 0.5m @ 1.15 g/t Au from 408.80m and on this basis no
follow up can be recommended.
Lake Zone
The Ramba-Lumba target is characterised by multiple parallel and anastomosing
shear structures and quartz veins mapped in a >3km long and up to 600m wide
corridor. The shallow parts of the mineralised shears were partially mined in
the 1980-1990s.
Based on the encouraging results of the DD holes which totalled 1604 metres
drilled in Q2, a follow-up drilling programme commenced in August. Nine diamond
drill holes totalling 2738 metres have been drilled to follow-up recent
significant intercepts and test strike the dip/plunge extensions of the
mineralisation. The assay results from this are still awaited.
Burkina Faso
During Q3 we continued to explore our four joint-venture properties covering
over 2,700km² in the highly prospective Houndé Belt in southwest Burkina Faso.
Due to the onset of the rainy season at the end of July, no fieldwork was
carried out during the months of August and September.
South Houndé JV (Sarama Resources Limited) - current interest 50%
Tankoro Corridor- MM and MC Zones
During the first half of the year SRK Consulting (UK) Limited ("SRK") were
contracted to update the mineral resource estimation, based on the new 3D
geology model with work still ongoing.
Central Houndé JV (Thor Explorations Limited) - current interest 51%, next
stage earn-in to 80%
Detailed field geological mapping and rock-chip sampling continued on the
Légué-Bongui Corridor and on the Ouéré soil anomaly. Regional soil sampling
identified a number of anomalies.
The programme for the remainder of the year on the Central Houndé project
comprises 5000 metres of air-core drilling to test the continuity of the gold
mineralisation along the strike and to test recently identified soil anomalies.
The drilling will be converted to RC where ground conditions are not suitable.
For logistical reasons, drilling at Central Houndé will be conducted in Q4
after the wet season finishes.
Pinarello & Konkolikan JV (Canyon Resources Limited) - 100% interest
The air-core drilling programme started on the Western part of the Tangolobé
target in June 2018 and was completed on 27th July. A total of 9,940 metres
were drilled, returning only one significant result (2m @ 1.11 from 36m at
Dafala).
Frontier JV (Metallor SA) - earning 100% through option payments
No field work was conducted on the Frontier project in Q3. A number of strong
targets have already been identified and these will be followed up in Q4 with
6,000 metres of air-core drilling.
Mali
Due to the early onset of the rainy season during Q3, only limited field work
could be conducted on our properties in the highly prospective Senegal-Mali
Shear Zone (SMSZ) in southwest Mali. Acacia currently manages two joint
ventures and holds one permit covering a total of 191km².
Tintinba-Bané Project JV (Demba Camara and Cadem Gold) - 100% interest
A drilling programme that started in mid-June had to be stopped in early July
due to the onset of the rainy season. Only 2730 metres of a total planned 5000
metres could be drilled during the quarter with the remainder scheduled for
drilling after the rainy seasons during Q4. Boubou JV (Mande Empire) - earning
100% through option payments
No fieldwork was carried out during Q3.The results of a regional soil sampling
survey have been received. Two strong NE striking soil anomalies of > 80 ppb
Au, supported by As assays were observed. The anomalies have a strike extent in
excess of 1 km. Infill sampling and mapping is planned during Q4.
Gourbassi Est - 100% Acacia (ABG Exploration Mali SARL)
No fieldwork was carried out during Q3. All outstanding soil assay results were
received during the period and a strong >80 ppm Au, NNE striking, soil anomaly
was identified in the western portion of the tenement. The soil anomaly has a
strike length of approximately 3km. Multi element analysis and detailed mapping
is planned for Q4.
Non-IFRS Measures
Acacia has identified certain measures in this report that are not measures
defined under IFRS. Non-IFRS financial measures disclosed by management are
provided as additional information to investors in order to provide them with
an alternative method for assessing Acacia's financial condition and operating
results, and reflects more relevant measures for the industry in which Acacia
operates. These measures are not in accordance with, or a substitute for, IFRS,
and may be different from or inconsistent with non-IFRS financial measures used
by other companies. These measures are explained further below.
Net average realised gold price per ounce sold is a non-IFRS financial measure
which excludes from gold revenue: unrealised gains and losses on non-hedge
derivative contracts and export duties but it also includes realised gains and
losses on gold hedge contracts reported as part of cost of sales.
Net average realised gold price per ounce sold have been calculated as follow:
(US$000) Three months ended 30 Nine months ended 30
September September
(Unaudited) 2018 2017 2018 2017
Gold revenue 169,828 555,687
164,578 496,243
Add: Realised gold hedge gains - - -
1,662
Net gold revenue 169,828 555,687
164,578 497,905
Gold sold (ounces) 132,787 445,225
135,875 386,920
Net average realised gold price 1,279 1,248
(US$/ounce) 1,211 1,287
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.
Three months ended 30 Nine months ended 30
(US$'000) September September
(Unaudited) 2018 2017 2018 2017
Cost of Sales
Direct mining costs 79,230 68,508 229,383 228,818
Third party smelting and refining 313 1,498 2,340 8,236
fees
Realised gains on economic hedges (77) 337 (315) 615
Realised gains on gold hedges - - (1,662) -
Royalty expense 12,676 12,213 38,375 30,895
Depreciation and amortisation* 20,977 22,982 66,224 80,941
Total 113,119 105,538 334,345 349,505
Total cost of sales 113,119 105,538 334,345 349,505
Deduct: Depreciation and (20,977) (22,982) (66,224) (80,941)
amortisation*
Add: Realised gains on gold hedges - - 1,662 -
Deduct: Co-product revenue (1,064) (774) (2,781) (6,579)
Total cash cost 91,078 81,782 267,002 261,985
Total ounces sold 135,875 132,787 386,920 445,225
Total cash cost per ounce sold 670 616 690 588
* Depreciation and amortisation includes the depreciation component of the cost
of inventory sold.
All-in sustaining cost (AISC) per ounce sold is a non-IFRS financial measure.
The measure is in accordance with the World Gold Council's guidance issued in
June 2013. It is calculated by taking cash cost per ounce sold and adding
corporate administration costs, share-based payments, reclamation and
remediation costs for operating mines, corporate social responsibility
expenses, mine exploration and study costs, realised gains and/or losses on
operating hedges, capitalised stripping and underground development costs and
sustaining capital expenditure. This is then divided by the total ounces sold.
A reconciliation between cash cost per ounce sold and AISC for the key business
segments is presented below:
(Unaudited) Three months ended 30 September 2018 Three months ended 30 September 2017
(US$/oz sold) Bulyanhulu North Buzwagi Group* Bulyanhulu North Buzwagi Group*
Mara Mara
Cash cost per 564 572 950 670 863 550 564 616
ounce sold
Corporate 39 34 29 47 60 28 50 51
administration
Share based (12) 1 1 1 (8) (2) (3) (5)
payments
Rehabilitation 27 5 7 7 21 11 6 12
CSR expenses 62 7 11 16 10 17 8 16
Capitalised - 126 - 83 310 194 - 170
development
Sustaining 47 69 20 56 109 66 70 79
capital
Total AISC 727 814 1,018 880 1,365 864 695 939
* The group total includes a cost of US$19/oz in Q3 2018 mainly related to
corporate costs incurred, and a cost of US$16/oz in Q3 2017.
(Unaudited) Nine months ended 30 September Nine months ended 30 September 2017
2018
(US$/oz sold) Bulyanhulu North Buzwagi Group* Bulyanhulu North Buzwagi Group*
Mara Mara
Cash cost per 617 582 960 690 812 473 647 588
ounce sold
Corporate 42 36 31 46 42 25 49 43
administration
Share based (18) (1) (2) (3) (5) (2) (5) (19)
payments
Rehabilitation 28 7 7 8 17 11 6 11
CSR expenses 37 8 9 13 9 10 8 13
Capitalised 8 158 - 102 365 189 - 195
development
Sustaining 78 81 26 66 106 68 37 76
capital
Total AISC 792 871 1,031 922 1,346 774 742 907
* The group total includes a cost of US$13/oz in YTD 2018 mainly related to
corporate costs incurred, and a cost of US$1/oz for YTD 2017.
AISC is intended to provide additional information on the total sustaining cost
for each ounce sold, taking into account expenditure incurred in addition to
direct mining costs and selling costs.
Cash cost per tonne milled is a non-IFRS financial measure. Cash costs include
all costs absorbed into inventory, as well as royalties, co-product credits,
and production taxes, and exclude capitalised production stripping costs,
inventory purchase accounting adjustments, unrealised gains/losses from
non-hedge currency and commodity contracts, depreciation and amortisation and
corporate social responsibility charges. Cash cost is calculated net of
co-product revenue. Cash cost per tonne milled is calculated by dividing the
aggregate of these costs by total tonnes milled.
EBITDA is a non-IFRS financial measure. Acacia calculates EBITDA as net profit
or loss for the period excluding:
* Income tax expense;
* Finance expense;
* Finance income;
* Depreciation and amortisation; and
* Impairment charges of goodwill and other long-lived assets.
EBITDA is intended to provide additional information to investors and analysts.
It does not have any standardised meaning prescribed by IFRS and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with IFRS. EBITDA excludes the impact of cash costs of financing
activities and taxes, and the effects of changes in operating working capital
balances, and therefore is not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other companies may
calculate EBITDA differently.
A reconciliation between net profit for the period and EBITDA is presented
below:
(US$000) Three months ended 30 Nine months ended 30
September September
(Unaudited) 2018 2017 2018 2017
Net profit for the period 11,850 16,038 42,727 78,581
Plus: income tax expense 9,797 8,561 35,577 45,563
Plus: depreciation and amortisation1 20,977 22,982 66,224 80,941
Plus: impairment charges - - 24,234 -
Plus: finance expense 2,172 2,982 10,412 8,436
Less: finance income (234) (261) (1,042) (1,804)
EBITDA 44,562 50,302 178,132 211,717
Adjusted for:
Restructuring costs - 15,399 - 18,703
Gain on sale of non-core mineral - - (45,000) -
royalty
One off legal settlements2 - 3,583 3,030 5,083
Reduced operational costs3 - 7,411 - 7,411
Adjusted EBITDA 44,562 76,695 136,162 242,914
1 Depreciation and amortisation includes the depreciation component of the cost
of inventory sold.
2 Once-off legal settlements relate to the North Mara royalty settlement.
3 Reduced operational costs for Q3 2017 relate primarily to once-off contractor
exit costs and inventory write-downs incurred as part of the Bulyanhulu reduced
operations programme.
Adjusted EBITDA is a non-IFRS financial measure. It is calculated by excluding
one-off costs or credits relating to non-routine transactions from EBITDA. It
excludes other credits and charges that, individually or in aggregate, if of a
similar type, are of a nature or size that requires explanation in order to
provide additional insight into the underlying business performance.
EBIT is a non-IFRS financial measure and reflects EBITDA adjusted for
depreciation and amortisation and impairment charges.
Adjusted net earnings is a non-IFRS financial measure. It is calculated by
excluding certain costs or credits relating to non-routine transactions from
net profit attributed to owners of the parent. It includes other credit and
charges that, individually or in aggregate, if of a similar type, are of a
nature or size that requires explanation in order to provide additional insight
into the underlying business performance.
Adjusted net earnings and adjusted earnings per share have been calculated as
follows:
(US$000) Three months ended 30 Nine months ended 30
September September
(Unaudited) 2018 2017 2018 2017
Net profit for the period 11,850 16,038 42,727 78,581
Adjusted for:
Gain on sale of non-core mineral - - (45,000) -
royalty
Restructuring cost - 15,399 - 18,703
Impairment charges1 - - 24,234 -
Once-off legal settlements2 - 3,583 3,030 5,083
Reduced operational costs3 - 7,411 - 7,411
Tax impact of the above - (7,918) 378 (9,359)
Adjusted net earnings 11,850 34,513 25,369 100,419
1 The impairment charge was recognised as a result of the revaluation of
Acacia's remaining stake in the Nyanzaga Project.
2 Once-off legal settlements relate to the North Mara royalty settlement.
3 Reduced operational costs for Q3 2017 relate primarily to once-off contractor
exit costs and inventory write-downs incurred as part of the Bulyanhulu reduced
operations programme.
Adjusted net earnings per share is a non-IFRS financial measure and is
calculated by dividing adjusted net earnings by the weighted average number of
Ordinary Shares in issue.
Free cash flow is a non-IFRS measure and represents the change in cash and cash
equivalents in a given period.
Net cash is a non-IFRS measure. It is calculated by deducting total borrowings
from cash and cash equivalents.
Mining statistical information
The following describes certain line items used in the Acacia Group's
discussion of key performance indicators:
* Open pit material mined - measures in tonnes the total amount of open pit
ore and waste mined.
* Underground ore tonnes hoisted - measures in tonnes the total amount of
underground ore mined and hoisted.
* Underground ore tonnes trammed - measures in tonnes the total amount of
underground ore mined and trammed.
* Total tonnes mined includes open pit material plus underground ore tonnes
hoisted.
* Strip ratio - measures the ratio of waste?to?ore for open pit material
mined.
* Ore milled - measures in tonnes the amount of ore material processed
through the mill.
* Head grade - measures the metal content of mined ore going into a mill for
processing.
* Milled recovery - measures the proportion of valuable metal physically
recovered in the processing of ore. It is generally stated as a percentage
of the metal recovered compared to the total metal originally present.
END
(END) Dow Jones Newswires
October 19, 2018 02:00 ET (06:00 GMT)
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