acacia mining plc (“acacia’’) reports full year 2017 results financial... · 2018-02-12 ·...
TRANSCRIPT
LSE:ACA www.acaciamining.com
1
12 February 2017
Results for the 12 months ended 31 December 2017 (Unaudited)
Based on IFRS and expressed in US Dollars (US$)
Acacia Mining plc (“Acacia’’) reports full year 2017 results
“We delivered resilient operational performance during a challenging 2017, with full year gold production of 767,883 ounces at all-in
sustaining costs (“AISC”) of US$875 per ounce”, said Peter Geleta, Interim CEO of Acacia. “Whilst we were impacted by events
beyond our control, we took decisive action to stabilise our business and believe our operations are now well placed to deliver in 2018.
The challenges in our operating environment led to our production guidance being revised during 2017, whilst the ongoing ban on the
export of gold/copper concentrate meant that we were unable to export and sell 185,800 ounces of produced gold which led to a
substantial cash outflow. As expected, we will see a step-down in production in 2018 to 435,000-475,000 ounces as Buzwagi transitions
to processing stockpiles and Bulyanhulu, whilst in reduced operations, solely re-processes tailings. Our continued cost discipline means
that AISC will remain competitive at US$935-985 per ounce. Our focus remains on delivering optimal performance from all aspects of the
business within our control in the current operating environment, returning the business to free cash generation and delivering value for
all of our stakeholders. We are supporting efforts towards achieving a negotiated resolution with the Tanzanian Government.”
Operational Highlights
Total Recordable Injury Frequency Rate (TRIFR) of 0.45, 39% lower than 2016
2017 gold production of 767,883 ounces, 7% lower than 2016 as a result of lower production at Bulyanhulu primarily due to the
transition to reduced operations in Q4 2017
Gold sales of 592,861 ounces, 22% lower than production, comprised 19,720 ounces of gold in concentrate, 10% of total concentrate
production due to the concentrate export ban imposed in March 2017 and 573,141 ounces of gold in doré, in line with doré production
2017 AISC1 of US$875 per ounce sold, below full year guidance range and our lowest ever achieved
Successful drilling programme at North Mara has more than doubled the Mineral Reserve at the Gokona Underground to 1.3Moz
New management leading stabilisation of company and post year-end appointed a senior Tanzanian to lead Tanzanian business
Financial Highlights
Financial performance was significantly impacted by a post-tax non-cash impairment charge of US$644 million resulting from
uncertainty in the operating environment and the ban on exporting concentrate, resulting in US$264 million of lost revenue in the year
Revenue of US$752 million, 29% lower than 2016, with Adjusted EBITDA1 of US$311 million, 24% down from 2016
Net loss of US$707 million includes a post-tax impairment charge of US$644 million, equating to a loss of US173 cents per share
Adjusted net earnings of US$146 million and Adjusted EPS of US35.7 cents were 9% below 2016
Cash balance fell from US$318 million to US$81 million at year-end, due to lost revenue resulting from the concentrate ban and a
gross build-up of VAT receivables of US$91 million, but was boosted post year-end by the sale of a non-core royalty for US$45 million
Entered into option agreements to provide a floor price of at least US$1,300 per ounce for majority of H1 2018 production
Contributed US$143 million of taxes and royalties to Tanzania and implemented projects benefiting over 60,000 Tanzanians in 2017
Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Gold production (ounces) 148,477 212,954 767,883 829,705
Gold sold (ounces) 147,636 209,292 592,861 816,743
Cash cost (US$/ounce)1 581 679 587 640
AISC (US$/ounce)1 779 952 875 958
Net average realised gold price (US$/ounce)1 1,296 1,211 1,260 1,240
(in US$'000)
Revenue 189,249 263,890 751,515 1,053,532
EBITDA 1 45,463 105,681 257,180 415,388
Adjusted EBITDA1 67,613 103,010 310,527 409,903
Net (loss)/earnings (785,975) 48,285 (707,394) 94,944
Basic (loss)/earnings per share (EPS) (cents) (191.7) 11.8 (172.5) 23.2
Adjusted net (loss)/earnings1 45,799 46,415 146,218 161,021
Adjusted net (loss)/earnings per share (AEPS) (cents)1 11.2 11.3 35.7 39.2
Cash generated from operating activities (1,503) 60,933 (22,972) 317,976
Capital expenditure2 21,301 57,826 149,376 195,898
Cash balance 80,513 317,791 80,513 317,791
Total borrowings 71,000 99,400 71,000 99,400 1
These are non-IFRS measures. Refer to page 33 for definitions 2
Excludes non-cash capital adjustments (reclamation asset adjustments) and include finance lease purchases and land purchases recognised as long term prepayments
LSE:ACA www.acaciamining.com
2
CEO Statement
The company recorded resilient performance in what became a difficult operating environment in 2017 and expects to return the
business to free cash generation during the forthcoming year. Whilst operational performance was solid, financial performance was
significantly impacted by Tanzania’s on-going ban on exporting gold/copper concentrate which resulted in approximately US$264
million of lost revenue in 2017 and drove a total cash outflow of US$237 million.
Whilst we have been impacted by events beyond our control, our operations still continued to deliver during 2017. It was especially
pleasing to see a record year of production at Buzwagi of 268,785 ounces in spite of the uncertainty about the mine’s future as the
mine effectively completed the final stage of the open pit ahead of moving to a stockpile processing operation for the next three years.
North Mara continued to perform well and delivered strong free cash flow despite production of 323,607 ounces being below 2016’s
record year. Grades from the Gokona Underground remained strong, albeit behind 2016’s bonanza grades, as the focus of mining was
in the lower grade West Zone. During the year we completed the mining of the Nyabirama Stage 3 open pit and continued to progress
waste stripping at the start of the Stage 4 open pit which will provide the majority of the mill feed going forward. At Bulyanhulu we made
the difficult decision to move the mine to reduced operations in September and temporarily cease production from the underground
mine and therefore gold/copper concentrates, after significant cash outflows through the year. This was the primary driver behind
production of 175,491 ounces being 39% behind 2016’s level.
On the cost side, we demonstrated further improvement in AISC as strict cost discipline was maintained. Group AISC of US$875 per
ounce sold was below the guidance range and the lowest that Acacia has ever achieved. If Group sales ounces had equalled
production, AISC would have been approximately US$798 per ounce sold. Buzwagi benefitted from increased production rates which
drove an AISC of US$667 per ounce sold, which was 39% lower than 2016, with inventory adjustments largely offsetting the lack of
sales of gold in concentrate. At North Mara we saw a small increase in AISC to US$803 per ounce sold primarily driven by the lower
production base compared to the previous year. At Bulyanhulu the impact of the lower sales and production base led to AISC per
ounce sold being 30% higher than 2016 at US$1,373 although this was partly offset by lower capitalised development costs and lower
sustaining capital spend.
One of the key focus areas at Acacia over the last four years has been on reducing the number of international employees and
contractors within our business and ensuring that our Tanzanian assets are increasingly led and operated by Tanzanian employees.
Since 2013, we have driven a reduction in international employees of approximately 85% within our business and now over 96% of our
people are Tanzanian. Since my appointment as Interim CEO, we have continued this process and following the move to reduced
operations at Bulyanhulu and the transition of Buzwagi to stockpile processing we have consolidated the management teams at the two
mines, which are located within the same region, into one, under the leadership of an experienced Tanzanian national, Benedict
Busunzu. We are pleased to report the combined Bulyanhulu and Buzwagi management team is now made up of five Tanzanian
nationals and one international employee. Post year end we also appointed Asa Mwaipopo as our Managing Director, Tanzania. Asa is
a highly experienced Tanzanian mining engineer, who has worked in the industry and for Acacia for a number of years in increasingly
senior roles. In his new role, he will head up our Tanzanian business by becoming the Managing Director of each of our Tanzanian
operating entities with the mine general managers and functional heads in Tanzania reporting directly into him.
Discussions between the Government of Tanzania (“GoT”) and Barrick Gold Corporation (“Barrick”), Acacia’s majority shareholder,
aimed at resolving the current situation remain on-going. In October 2017, the GoT and Barrick each announced that the parties had
agreed to a framework on a way forward, and Barrick has indicated that they expect to be able to present a detailed proposal for a
possible solution to Acacia for review and approval during the first half of 2018. We are providing support to Barrick in its ongoing
discussions, and any proposal that may be agreed in principle between Barrick and the GoT will require Acacia’s approval.
Financial Overview
The positive operational performance was not translated in positive cash flow due to Acacia’s inability to export and sell a total of
185,800 ounces of gold, 12.1 million pounds of copper and 158,900 ounces of silver contained in concentrate as a result of the
concentrate export ban. This includes 10,678 ounces of gold in concentrate produced in late 2016 but not sold. This heavily impacted
our Bulyanhulu and Buzwagi mines which produced gold in both doré and in concentrate form, while North Mara sales were unaffected
by the ban due to 100% of its production being doré. This, together with an increase in indirect tax receivables, meant that we ended
the year with US$81 million of cash on our balance sheet, a decrease from US$318 million on hand at the end of the previous year.
Net cash also fell, but we continued to repay our CIL debt facility during 2017 and saw debt balances fall to US$71 million at the end of
2017. Post year end we completed the sale of a non-core royalty for US$45 million and this, together with the purchase of put options
for a portion of future gold sales and strong cost discipline will provide additional support to our balance sheet.
Total revenue for the year amounted to US$752 million which was 29% lower than 2016 as a result of the inability to sell gold, copper
and silver contained in concentrate as set out above during the year. The lack of sales impacted EBITDA, which at US$257 million was
38% below 2016. Net earnings were impacted by the lack of sales, but also by a post-tax non cash impairment charge of US$644
million, primarily associated with Bulyanhulu as a result of the increased uncertainty in our operating environment and the movement to
reduced operations. This together with an increase in our uncertain tax provision from US$128 million to US$300 million drove a net
loss of US$707 million. Adjusted net earnings amounted to US$146 million which was 9% below 2016.
LSE:ACA www.acaciamining.com
3
Outlook
The group has successfully managed through a challenging environment to deliver a year of resilient operational performance in 2017.
As a result of Bulyanhulu’s transition to reduced operations and the planned transition of Buzwagi to a stockpile processing operation in
2018 we expect to see a step-down in production from 2017 levels to 435,000-475,000 ounces at increased all-in sustaining cost of
US$935-985 per ounce. Cash costs per ounce are also expected to increase to between US$690-720 per ounce in 2018. Group AISC
and cash costs are both negatively impacted by approximately US$50 per ounce due to the release of non-cash high cost inventory at
Buzwagi as we process ore stockpiles previously classified as ore inventory. We expect production to be broadly flat through the year
although due to the roll-over of cost from the movement to reduced operations at Bulyanhulu into Q1 2018 we expect increased cash flow
in the second half of the year. All gold produced in 2018 is expected to be in doré form.
At North Mara we expect production to be broadly in line with 2017 at approximately 325,000 ounces as the continued increase in
production from the Gokona Underground is offset by lower open pit tonnes and grade as the Nyabirama Stage 3 open pit is completed
and all ore is sourced from the beginning of the Stage 4 pit. AISC is expected to be approximately US$850 per ounce, approximately 5%
higher than 2017, driven by an increase in cash costs due to the increased mining activity and increased allocation of corporate shared
services costs. During 2018 we will continue to progress the drilling programmes at Gokona, which led to a doubling of underground
reserves in 2017 to 1.3Moz at a grade of 6.3 g/t. At Nyabirama we are also progressing the permitting for an underground exploration
decline, this process is expected to be completed in 2018.
At Bulyanhulu we completed the transition to reduced operations in the fourth quarter, which regrettably led to the retrenchment of the
majority of the workforce at the mine. In total, the retrenchments, together with the cancellation of supply contracts, led to a cost of
US$25 million, with US$20 million incurred in Q4 2017 and the balance due to be incurred in Q1 2018. In addition we saw an outflow of
accounts payable of approximately US$35 million, of which US$5 million is expected to be incurred in Q1 2018. Whilst the mine is on
reduced operations, at a monthly cost of approximately US$3 million, Acacia is taking the opportunity to progress essential capital spend
of approximately US$10 million, 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. These costs are excluded from AISC on the principle that they are not
representative of operational costs. The study is expected to take until H2 2018 to be completed and as a result Acacia does not expect
the underground mine to restart in 2018 and is targeting a phased restart through 2019, assuming the concentrate ban is resolved
during 2018. The mine will continue with the re-processing of tailings through 2018 at an annual production rate of approximately 30,000
ounces and an AISC of approximately US$1,000 per ounce, which will partially offset the cost of reduced operations.
As previously guided, Buzwagi is transitioning to a stockpile processing operation in 2018 as a result of the effective completion of the
open pit and will see a step down in production as a result. During 2017 the mine exceeded its production plan by 15,000 ounces whilst
delivering over 5 million tonnes of ore to the stockpile, albeit at lower grades. As a result expected life of mine production has increased
by approximately 100,000 ounces. In 2018, mill feed will be almost exclusively from the stockpiles and as a result head grades are
expected to drop significantly resulting in production for the year being approximately 100,000 ounces. As a result of the lower
production and release of non-cash high cost inventory of approximately US$200 per ounce, reported AISC is due to increase to
approximately US$1,100 per ounce sold, although we are looking to optimise the cost profile as we transition to stockpile processing.
As a result of reduced operations at Bulyanhulu we expect to see Group capital expenditure in 2018 fall to approximately US$100
million. This is comprised of approximately US$50 million of capitalised development / stripping at North Mara, US$35 million of
sustaining capital, primarily at North Mara, and US$15 million of expansion capital, made up predominantly of investment in the process
plant at Bulyanhulu and capitalised drilling at North Mara as we look to delineate additional resources to support a 10 year life of mine
producing in excess of 300,000 ounces per annum.
Acacia is committed to strong cost discipline and is continuing to take steps to ensure the long-term viability of our business whilst we
await an outcome of the discussions between Barrick and the Government of Tanzania. During 2017 Acacia made significant decisions
at both the Bulyanhulu and Buzwagi operations and we should now be able to sell all of the gold we produce going forward. We
continue to take steps to protect the balance sheet including a reduction in planned greenfield exploration spend in 2018 to US$15
million, and whilst we currently anticipate corporate overheads being in line with 2017, we are targeting reducing this spend during the
year.
Contribution to Tanzania
Acacia continues to share the Government of Tanzania’s goals of enhancing the country’s social and economic development and in
2017 contributed US$143 million in taxes and royalties to Tanzania. Since the inception of its businesses, over 15 years ago, the
Company, and its predecessors, have invested over US$4 billion into the country to build and sustain our mines, spent over US$3
billion with Tanzanian suppliers to support the operation of our businesses, invested over US$75 million into our communities and paid
over US$1 billion in taxes and royalties. We have also built a 60 kilometre water pipeline to supply clean water to communities around
Bulyanhulu, invested US$45 million to provide electricity to communities, built and renovated 57 schools in the Lake Zone whilst
providing over 18,000 desks and building 129 teachers houses.
LSE:ACA www.acaciamining.com
4
In terms of developing sustainable communities around our mines over the last five years, Acacia has invested heavily in building social
infrastructure such as schools, roads, health and water facilities in close cooperation with its surrounding population. In 2017 we began
the implementation of the new Sustainable Communities (“SC”) Strategy which focuses on adding further value to this physical
infrastructure and contributing positively to the development of a diversified local economy in our zone of influence. We believe that the
SC Strategy is aligned with Tanzania’s national development agenda, as well as the United Nations’ Sustainable Development Goals.
By the end of 2017 we had achieved an approximate 80% delivery rate on our infrastructure legacy commitments. This included the
completion and/or initiation of a number of projects at all three mines. Projects included a US$500,000 upgrade of the Bugarama Health
Centre at Bulyanhulu which supports healthcare for 58,000 people living in the 14 villages in Kakola and its surrounding areas. The
focus at Buzwagi has been the construction of a new dormitory at Mwendakulima Secondary School for female pupils after the original
dormitory was accidentally destroyed in a fire. The new dormitory will accommodate more than 100 pupils and make secondary
education more accessible to girls. At North Mara we constructed the Nyamwaga and Kerende Health Centres and invested in the
Nyamwaga/Keisangora water projects designed to improve access to clean water.
Operating Environment
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. Following the directive, we
immediately ceased all exports of our gold/copper concentrate including the 277 containers that had been approved for export prior to
the ban and which remain impounded in Dar es Salaam at either the port or a staging warehouse. As mentioned above, the export ban
impacts Bulyanhulu and Buzwagi which ordinarily produced a proportion of their gold in concentrate form due to the mineralogy of the
ore at those two mines. North Mara production and sales were unaffected by the ban on export of concentrates due to 100% of its
production being doré.
During the second quarter of 2017 two Presidential Committees announced their findings following investigations into the technical and
economic aspects of the historic exports of gold/copper concentrates. Acacia has fully refuted the implausible findings of both
committees, which claimed that Acacia and its predecessor companies had historically and significantly under-declared the contents of
exports of concentrate. Acacia reiterates that it has declared everything of commercial value that it has produced since it started
operating in Tanzania and has paid all appropriate royalties and taxes on all of the payable minerals that it has produced. Acacia has
requested copies of the reports of the two Presidential Committees and called for independent verification of the results announced by
the Committees, but to date has not received a response to these requests.
In late June 2017, new legislation was proposed which made significant changes to the legal and regulatory framework governing the
natural resources sector as a whole in Tanzania. Post year-end new mining regulations were also issued which are currently being
reviewed. Prior to the legislation being passed into law in early July 2017, in order to protect the Company, Bulyanhulu Gold Mine
Limited (“BGML”), the owner of the Bulyanhulu mine, and Pangea Minerals Limited (“PML”), the owner of the Buzwagi mine, each
commenced international arbitrations against the GoT in accordance with the dispute resolution processes agreed by the GoT in the
Mineral Development Agreements (“MDAs”) with BGML and PML. These arbitrations remain ongoing. Acacia continues to monitor the
impact of the new legislation in light of its MDAs with the GoT. However, to minimise further disruptions to our operations we have
been, in the interim, satisfying the requirements imposed by the new legislation as regards the increased royalty rate applicable to
metallic minerals such as gold, copper and silver of 6% (increased from 4%), in addition to a new 1% clearing fee on mineral exports.
These payments are being made under protest, without prejudice to our legal rights under our MDAs.
In July, BGML and PML received adjusted tax assessments from the Tanzanian Revenue Authority (“TRA”) totalling US$190 billion for
alleged unpaid taxes, interest and penalties, apparently issued in respect of alleged and disputed under-declared export revenues, and
appearing to follow on from the announced findings of the First and Second Presidential Committees. Acacia refutes the findings of
each Committee, re-iterates that it has fully declared all revenues, and has requested copies of the reports of the Committees and
independent expert verification of their findings. Acacia has requested the TRA to provide calculations and the necessary substantiation
to support these assessments as well as a subsequent conflicting set of adjusted assessments for PML which amount to US$3 bil lion
and appear to relate to the historical operation of the Tulawaka mine at which PML ceased operations in 2013. The TRA has so far not
provided its calculations or substantiation for the adjusted assessments, and Acacia is objecting to and defending these through the
Tanzanian tax appeals processes. The allegations made by the First and Second Committees are included in the matters that have
already been referred to international arbitration by BGML and PML. In addition, the Company continues to dispute and defend in
accordance with Tanzanian law and procedure the outstanding tax claims previously reported as having been brought by the TRA
against Acacia Mining plc, on the purported basis that Acacia itself has established tax residence in Tanzania. These appeals remain
the subject of the Tanzanian tax appeals processes.
In July 2017, Barrick, Acacia’s majority shareholder, announced that it had commenced discussions with the GoT aimed at identifying a
possible solution to Acacia’s disputes with the GoT. The GoT informed Barrick that it wished to continue their dialogue, and therefore
Acacia has not participated directly in these discussions.
In October 2017, Barrick and the GoT announced that they had agreed a framework proposing a new partnership between Acacia and
the GoT. As announced by Barrick, the key terms of the proposal included that: the economic benefits generated by the Company ’s
LSE:ACA www.acaciamining.com
5
operations in Tanzania would be shared between Acacia and the GoT on a 50/50 basis going forward, to be delivered in the form of
royalties, taxes and a 16% free carry interest in the operating mines; the establishment of a new Tanzanian operating company to
manage the mining operations, with GoT participation in decision-making on certain issues; a number of social licence to operate
projects and commitments; there would be further work with the GoT to advance concepts for increasing in-country beneficiation of
gold; and Acacia would make a US$300 million payment, staged over time, in respect of outstanding tax claims between Acacia and
the GoT.
Since October, Barrick and the GoT have continued discussions aimed at agreeing and documenting the details of the announced
framework, and Barrick have announced that they are targeting completion in H1 2018. Acacia continues to support Barrick in its
discussions with the Tanzanian Government towards identifying a possible negotiated resolution. Acacia is not directly involved in the
ongoing discussions, and awaits a detailed agreed proposal and documented final agreements for a comprehensive settlement, which
will be reviewed by an Independent Committee of the Company’s Directors.
Safety
Safety performance during 2017 demonstrated significant progress on the previous year. The Company recorded a Group-wide Total
Recordable Injury Frequency Rate (‘TRIFR’) of 0.45 compared to 0.74 in 2016, a 39% improvement. The number of Lost Time Injuries
(‘LTI’) decreased from 32 in 2016 to 18 in 2017, a 44% improvement, and the injury severity rate decreased by 35%. We also
progressed a number of initiatives within an occupational health and safety context to increase the effectiveness of existing
occupational health programmes and continued to progress health assessments, including malaria control assessments, for our
employees and wider community base. The total number of malaria cases and the days lost due to malaria decreased by 29% and 51%
respectively during 2017.
Carrying Value Review and Tax Provision
Acacia has identified a number of potential triggers for impairment testing of the carrying value of its assets, including but not limited to,
the challenges experienced in the operating environment in Tanzania, the announcement of new legislation by the GoT in respect of
the natural resources sector and the resulting decision to reduce operations at Bulyanhulu. As a result, Acacia has undertaken a
carrying value review of the Group’s affected Cash Generating Units (CGUs).
Acacia considers that in accordance with applicable accounting standards, carrying values for the CGUs should be calculated by
reference to the key terms of the Framework announcements made by Barrick and by the GoT in October 2017 and discussed above,
with additional discounting to reflect the uncertainty around the final terms of any comprehensive settlement that might be reached.
While Acacia continues to provide support to Barrick in its discussions with the GoT, Acacia has not yet received for review and
approval a detailed proposal that has been agreed between Barrick and the GoT, and no conclusions can be made by Acacia as to
whether any particular terms of settlement would be approved by Acacia. In the meantime, Acacia continues to reserve its rights
included under our mine development agreements, the disputes between Acacia and the GoT have not yet been resolved, and PML
and BGML remain in international arbitration with the GoT. Acacia would prefer a negotiated resolution, but believes that there remain
a range of potential outcomes to the current situation.
This carrying value review demonstrates a potential reduction in value at all three operating assets, but Buzwagi and North Mara have
sufficient headroom above their current carrying values. At Bulyanhulu, however, the impact of the changes was greater, due to the
long life of the mine and the delay to a return to positive cash generation due to the move to reduced operations. Acacia has therefore
recorded a net impairment of US$632 million for Bulyanhulu, which includes a pre-tax write-down of US$122 million for goodwill. In
addition we have recorded an impairment charge of US$12 million for the Nyanzaga Project to reflect the current estimate for the
potential impact of the new mining laws on the carrying value of the project, which now stands at US$34 million.
In addition to the above net impairment, Acacia has also raised an additional tax provision of US$172 million relating to the estimated
uncertain tax positions for its operating companies, based on an estimate of the impact of a comprehensive settlement reflecting the
key terms of the Framework announcements. This brings total provisions for Acacia’s uncertain tax positions to US$300 million. Acacia
continues to reserve and protect all its legal rights, as noted above and including through the arbitrations commenced by BGML and
PML, and no liability has been incurred by Acacia as a result of the Framework announcements. The additional provision is required,
however, to meet applicable accounting standards requiring assessment of current obligations for accounting purposes based on an
assessment of relevant cash outflows from the relevant operating companies in respect of uncertain tax positions.
Reserves and Resources
Notwithstanding the performance of the gold price in 2017 we have taken the decision to maintain the 2016 gold price assumptions in
our Reserve and Resource calculations. This not only brings consistency of planning on an annual basis but it also helps underpin the
LSE:ACA www.acaciamining.com
6
financial robustness of our long-term planning. Our Reserve pricing is maintained at US$1,100 per ounce and our resource pricing has
been maintained at US$1,400 per ounce.
On a Group basis, our overall Reserves and Resources decreased slightly from 27.6 million ounces (“Moz”) to 27.4Moz during the year
with total Reserves marginally decreasing from 7.6Moz to 7.5Moz driven by depletion.
At North Mara, Reserves increased by 438,000 ounces (23%) from 1.9Moz in 2016 to 2.3Moz. This was driven by successful drilling
programmes at the Gokona Underground where Reserves increased from 656,000 ounces at 6.0 g/t to 1,338,000 ounces at 6.3 g/t,
despite depletion of 188koz during the year. This is the first step in demonstrating the long term potential of the Gokona Underground.
At Bulyanhulu, overall Reserves decreased by 417koz with the underground Reserve now amounting to 4.5Moz at 9.70 g/t compared
to 4.9Moz at 9.76 g/t. The change included depletion of 223koz and a further reduction of 199koz due to changes to the short and
medium term designs. A study completed on remnant mining around the Upper Reef 1 and Reef 2 areas indicated positive economics
and added 151koz to Reserves. The Tailings Reserve decreased to 180koz ounces at 1.05 g/t due to depletion. During 2018 we
expect to review the mine reserves in the context of the optimisation study currently underway.
At Buzwagi, Reserves declined due to depletion as the final stage of the open pit was effectively completed. However, during 2017, the
run-of-mine stockpile, which will be processed over the next three years, increased by 5 million tonnes with a 48% increase in
contained gold to 414koz ounces, albeit at lower grades of 0.91g/t.
At our exploration properties overall resources remained flat with the addition of resources in Kenya being offset by the removal of the
Golden Ridge project from resource and a reduction in resource at Nyanzaga. After completing a significant exploration drilling
programme during the year at the Liranda Project in Kenya we updated the Maiden Inferred Mineral Resource declared in February
2017. The updated model showing that the Isulu Inferred Resource has changed with additional drilling confirming structural
complexity. The enhanced modelling of the Isulu resource has upgraded confidence and increased grade. Additionally the upper parts
of two zones in the Bushiangala Prospect were upgraded from mineral inventory to an Inferred Resource Estimate. The updated
Inferred Resource Estimate returned 2.5 million tonnes at 12.9 g/t Au for 1.044 million ounces at Isulu and for Bushiangala 374,600
tonnes at 10.5 g/t Au for 126,600 ounces for a project total of 2.9 million tonnes at 12.6 g/t for 1.2Moz.
Board and Management Changes
At the end of 2017, there were a number of senior management departures, with Brad Gordon, CEO, Andrew Wray, CFO, Mark
Morcombe, COO and Peter Spora, Head of Discovery stepping down. Brad Gordon and Andrew Wray were instrumental in the
turnaround of the business over the past four years, with Mark Morcombe embedding operational discipline and Peter Spora
spearheading our growth across Africa. Acacia wishes them all well for the future. Whilst it was disappointing to see these experienced
and valued colleagues depart, we have significant depth within the business. My 35 years of industry experience primarily in African
gold mining and alongside our new CFO, Jaco Maritz’s 15 years of experience in the Acacia business, ensures we have the right team
to lead the stabilisation of the company over the next twelve months and then onto the next stage in its development.
With respect to the Board, during the year Peter Tomsett and Ambassador (retd) Juma Mwapachu stepped down from the Board, and
at the beginning of 2018 I replaced Brad Gordon on the Board of Directors. In addition, Michael Kenyon has been appointed as the
Senior Independent Director of the Company, in light of his role as Chair of the Company’s Independent Committee. Following these
changes, the Acacia Board comprise of seven members, including four Independent Non-Executive Directors, two Non-Executive
Directors and one Executive Director. Acacia would like to thank Brad, Peter and the Ambassador for their valuable commitment and
support to the Company during their tenure on the Board and wish them all the best for the future.
Dividend
Acacia has a cash flow based dividend policy where we aim to pay a dividend of between 15-30% of our operational cash flow after
sustaining capital and capitalised development but before expansion capital and financing costs. As a result of the inability to export
concentrates Acacia has experienced negative free cash flow in 2017 and therefore the Board of Directors has not recommended the
payment of a final dividend.
Finally, I would like to thank all of my colleagues for their commitment, resilience and continued focus during what has been a
challenging year for Acacia. I would also like to thank our Board for their support. We continue to prefer a negotiated solution to our
disputes with the Government of Tanzania, continue to support Barrick in its discussions with the Government, and remain hopeful for a
resolution during 2018.
Peter Geleta
Interim Chief Executive Officer
LSE:ACA www.acaciamining.com
7
Key Statistics Three months ended 31
December Year ended 31
December
(Unaudited) 2017 2016 2017 2016
Tonnes mined (thousands of tonnes) 5,270 9,644 31,917 38,491
Ore tonnes mined (thousands of tonnes) 2,274 2,584 13,707 9,419
Ore tonnes processed (thousands of tonnes) 1,855 2,567 8,719 9,818
Process recovery rate exc. tailings reclaim (percent) 91.1% 92.5% 92.4% 92.3%
Head grade exc. tailings reclaim (grams per tonne) 2.8 3.2 3.3 3.3
Process recovery rate inc. tailings reclaim (percent) 90.2% 88.9% 90.0% 88.5%
Head grade inc. tailings reclaim (grams per tonne) 2.8 2.9 3.0 3.0
Gold production (ounces) 148,477 212,954 767,883 829,705
Gold sold (ounces) 147,636 209,292 592,861 816,743
Copper production (thousands of pounds) - 4,255 12,897 16,239
Copper sold (thousands of pounds) - 3,384 1,341 14,745
Cash cost per tonne milled exc. tailings reclaim (US$/t)1 48 66 43 62
Cash cost per tonne milled inc. tailings reclaim (US$/t)1 46 55 40 53
Per ounce data
Average spot gold price2 1,275 1,222 1,257 1,251
Net average realised gold price1 1,296 1,211 1,260 1,240
Total cash cost1 581 679 587 640
All-in sustaining cost1 779 952 875 958
Average realised copper price (US$/lb) - 2.45 2.98 2.21
Financial results
Three months ended 31 December
Year ended 31 December
(Unaudited, in US$'000 unless otherwise stated) 2017 2016 2017 2016
Revenue 189,249 263,890 751,515 1,053,532
Cost of sales (108,942) (196,314) (458,447) (727,080)
Gross profit 80,307 67,576 293,068 326,452
Corporate administration (7,613) (6,218) (26,913) (21,895)
Share based payments (186) 9,795 8,236 (29,929)
Exploration and evaluation costs (3,384) (7,330) (24,829) (24,020)
Corporate social responsibility expenses (2,354) (3,068) (8,213) (10,665)
Impairment charge (850,182) - (850,182) -
Other (charges)/income (46,567) 1,208 (90,370) 11,649
Loss/(profit) before net finance expense and taxation (829,979) 61,963 (699,203) 251,592
Finance income 140 365 1,944 1,512
Finance expense (3,971) (2,644) (12,407) (11,047)
Loss/(profit) before taxation (833,810) 59,684 (709,666) 242,057
Tax credit/(expense) 47,835 (11,399) 2,272 (147,113)
Net (loss)/profit for the period (785,975) 48,285 (707,394) 94,944
1 These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to “Non IFRS measures” on page 33 for definitions.
2 Reflect the London PM fix price.
LSE:ACA www.acaciamining.com
8
For further information, please visit our website: www.acaciamining.com or contact:
Acacia Mining plc +44 (0) 207 129 7150
Peter Geleta, Interim Chief Executive Officer
Jaco Maritz, Chief Financial Officer
Giles Blackham, Head of Investor Relations & Corporate Development
Camarco +44 (0) 20 3757 4980
Gordon Poole / Nick Hennis
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 mines,
all located in north-west Tanzania: Bulyanhulu, Buzwagi, and North Mara and a portfolio of exploration projects in 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 presentation will be held for analysts and investors on 12 February 2018 at Noon London time.
For those unable to attend, an audio webcast of the presentation will be available on our website www.acaciamining.com. For those
who wish to ask questions, the access details for the conference call are as follows:
Participant dial in +44 20 3936 2999
Password: 506844 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.
LSE:ACA www.acaciamining.com
9
LSE: ACA
TABLE OF CONTENTS
Operating Review
10
Exploration Review
17
Financial Review
25
Significant judgements in applying accounting policies and key sources of estimation uncertainty 32
Non-IFRS measures
33
Risk Review
37
Condensed Financial Information:
- Consolidated Income Statement and Consolidated Statement of Comprehensive Income
38/39
- Consolidated Balance Sheet
40
- Consolidated Statement of Changes in Equity
41
- Consolidated Statement of Cash Flows
42
- Notes to the Condensed Financial Information
43
Reserves and Resources 64
LSE:ACA www.acaciamining.com
10
Operating Review
Despite the significant uncertainty caused by the operating environment in Tanzania, Acacia has continued to deliver improved safety
performance, with a full year Total Recordable Injury Frequency Rate (TRIFR) of 0.45 compared to 0.74 in 2016, a 39% improvement.
This performance is coupled with a significant decrease in the number of Lost Time Injuries (‘LTI’) which decreased from 32 in 2016 to 18
in 2017, a 44% improvement, and the injury severity rate, which decreased by 35%.
During 2017, Acacia delivered production of 767,883 ounces, a decrease of 7% year on year, while AISC of US$875 per ounce sold and
cash cost of US$587 per ounce sold were 9% and 8% lower than 2016 respectively. As a result of the ban on the export of gold/copper
concentrate, sales ounces trailed production by approximately 175,022 ounces. If sales ounces equalled production, AISC would have
been approximately US$798 per ounce and cash costs would have been approximately US$576 per ounce.
North Mara achieved full year production of 323,607 ounces, 14% lower than in 2016. This was a result of a 13% lower head grade
driven by lower grades received from the Gokona underground primarily due to the focus on the lower grade West Zone. The lower head grade was also impacted by lower grades received from the Nyabirama pit due to increased mining from the beginning of the Stage 4 open pit. Gold ounces sold for the year of 324,455 ounces were in line with production, but 14% lower than 2016 due to the lower production base. AISC of US$803 per ounce sold was 10% higher than 2016 primarily due to higher cash costs and the lower production base, partly offset by lower capitalised development and lower sustaining capital costs.
At Buzwagi, record gold production of 268,785 ounces was 66% higher than in 2016, and higher than expectations. This was mainly
due to a 75% higher head grade as a result of higher grade ore mined from the main ore zone at the bottom of pit. Gold sold for the
year amounted to 160,552 ounces, in line with 2016 and 40% lower than production, a direct result of the inability to export concentrate.
AISC per ounce sold of US$667 was 39% lower than 2016, mainly driven by lower cash costs.
At Bulyanhulu, gold production of 175,491 ounces was 39% lower than the prior year. This was due to a 34% decrease in run-of-mine
tonnes for the year primarily due to the decision to transition Bulyanhulu into reduced operations at the end of Q3 2017. In addition a
drought experienced in the Kahama district led to nearly a 4 month halt in production from reprocessed tailings which meant that
production was 36% lower than the previous year. Gold sales for the year were 107,855 ounces, 39% behind production due to the
impact of the concentrate export ban. The impact of the lower sales and production base led to AISC per ounce sold being 30% higher
than 2016 at US$1,373 although this was partly offset by lower capitalised development costs and lower sustaining capital spend.
Total tonnes mined during the year amounted to 31.9 million tonnes, 17% lower than 2016, mainly as a result of a 63% decrease in
total waste tonnes mined at Buzwagi as the open pit effectively concluded at the end of the year. Ore tonnes mined of 13.7 million
tonnes were 46% higher than 2016 predominantly driven by increased ore tonnes from Buzwagi as a result of improved access to ore
zones in the final stage of the open pit in 2017.
Ore tonnes processed amounted to 8.7 million tonnes, 11% lower than in 2016. This was mainly due to lower reprocessed tailings
throughput at Bulyanhulu following the halt of production from September to November due to water shortages as well as the impact of
the lower run of mine tonnes.
Head grade for the period (excluding tailings retreatment) of 3.3g/t was in line with 2016, the lower head grade at North Mara was offset
by the higher head grade at Buzwagi as a result of higher grade ore mined at the main ore zone.
Cash costs of US$587 per ounce sold for the year were 8% lower than in 2016 (US$640 per ounce sold), primarily due to:
‒ Increased investment in ore stockpiles, mainly at Buzwagi due to the higher production base (US$50/oz);
‒ Lower G&A costs mainly at Bulyanhulu driven by lower stock write downs, lower logistic and warehousing costs and lower
camp costs as well as lower aviation costs at all sites (US$40/oz);
‒ Lower consumable costs mainly driven by lower usage at Bulyanhulu and improved consumable unit costing and usage
optimisation at Buzwagi (US$32/oz);
These were offset by:
‒ Lower sales volumes partly offset by a build-up in finished goods ounces mainly at Bulyanhulu and Buzwagi (US$85/oz);
‒ Lower co-product revenue in the form of copper concentrates due to a lack of concentrate exports (US$54/oz) and
‒ Lower capitalised mining cost, mainly driven by the halting of development activities at Bulyanhulu, and at North Mara, due to a
decrease in capitalised stripping costs relating to the Nyabirama Cut 4 cutback and lower underground waste development
costs (US$51/oz).
Included in cost of sales and ultimately cash cost for 2017 is a credit of approximately US$94.2 million (US$157/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$875 per ounce sold was 9% lower than in 2016, despite the lag in sales against production. This was driven
by the lower capitalised development costs at both North Mara and Bulyanhulu (US$64/oz), a credit relating to share based payment
LSE:ACA www.acaciamining.com
11
revaluation driven by the approximate 47% reduction in the Acacia share price during the year (US$64/oz), lower cash costs (US$53/oz)
as explained above and lower sustaining capital spend at Bulyanhulu and North Mara (US$28/oz), partly offset by the impact of lower
sales volumes on individual cost items (US$120/oz).
If our sales ounces equalled production, AISC would have been approximately US$798 per ounce sold, compared to US$945 per ounce
sold on the same basis in 2016, a decrease of 16%, and excluding the impact of non-cash share based payment revaluation credits
would have been approximately US$809.
Cash generated from operating activities was an outflow of US$23.0 million which was a decrease of US$340.9 million from 2016
(US$318.0 million). The inability to export our concentrate since Q1 2017 has had a negative impact on operating cash flow of
approximately US$245.0 million. Working capital outflows mainly relating to an increase in indirect tax receivables and to increases in
supplies inventory, settlement of trade and other payables, and other current assets which included the North Mara corporate tax deposit
further impacted cash generated from operating activities.
Capital expenditure amounted to US$149.4 million, 24% lower compared to the capital expenditure of US$195.9 million in 2016. Capital
expenditure primarily comprised of capitalised development and stripping (US$100.6 million), investment in fixed equipment and mining
infrastructure at Bulyanhulu (US$9.0 million) and at North Mara (US$13.7 million), investment in mobile equipment and component
change-outs at both North Mara and Bulyanhulu (US$8.1 million) and land purchases at North Mara (US$1.6 million).
LSE:ACA www.acaciamining.com
12
Mine Site Review
Bulyanhulu
Key statistics
Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Key operational information:
Ounces produced oz 2,855 79,859 175,491 289,432
Ounces sold oz 376 74,803 107,855 279,286
Cash cost per ounce sold12
US$/oz - 784 840 722
AISC per ounce sold12
US$/oz - 1,061 1,373 1,058
Copper production Klbs - 1,707 3,906 6,391
Copper sold Klbs - 1,309 588 5,570
Run-of-mine:
Underground ore tonnes hoisted Kt - 244 596 909
Ore milled Kt - 263 612 933
Head grade g/t - 9.1 8.6 9.3
Mill recovery % - 91.8% 90.1% 91.4%
Ounces produced oz - 70,808 153,279 254,552
Cash cost per tonne milled1 US$/t - 209 126 197
Reprocessed tailings:
Ore milled Kt 105 451 1,010 1,650
Head grade g/t 1.4 1.3 1.4 1.4
Mill recovery % 58.7% 47.2% 48.0% 45.8%
Ounces produced oz 2,856 9,051 22,212 34,880
Capital Expenditure
- Sustaining capital US$('000) (2,447) 3,833 9,033 20,231
- Capitalised development US$('000) 337 15,996 39,543 63,082
- Expansionary capital US$('000) 151 188 1,190 1,262
(1,959) 20,017 49,766 84,575
- Non-cash reclamation asset adjustments US$('000) (4,735) 3,853 (4,158) 10,728
Total capital expenditure US$('000) (6,694) 23,870 45,608 95,303
1These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ‘Non-IFRS measures” on page 33 for definitions.
2Cash cost per ounce sold and AISC per ounce sold for the quarter are non-meaningful due to the impact of negligible sales ounces on the costs relating to reprocessed tailings.
Operating performance
Gold production of 175,491 ounces was 39% lower than 2016, mainly driven by a 34% decrease in run-of-mine tonnes for the year
primarily due to the transition of Bulyanhulu into reduced operations at the end of Q3 2017. In addition a drought experienced in the
Kahama district led to nearly a 4 month halt in production from reprocessed tailings which meant that production was 39% lower than
the previous year. Gold production comprised of 95,116 ounces in doré and 80,375 ounces in gold/copper concentrate.
Gold sold for the year of 107,855 ounces, was 39% lower than production and 61% lower than 2016 mainly as a result of the inability to
export concentrate from early March combined with the lower production base.
Copper production of 3.9 million pounds for the year was 39% lower than 2016 mainly due to Bulyanhulu being on reduced operations
since the end of Q3 resulting in no concentrate production for the rest of 2017, combined with lower copper grades for the year. Copper
sales were 89% lower than 2016 primarily due to the lack of exports of concentrate.
Cash costs of US$840 per ounce sold were 16% higher than 2016 (US$722), mainly due to the lower production base (US$712/oz),
lower co-product revenue (US$116/oz) and lower capitalised development costs (US$178/oz). This was partly offset by lower G&A costs
mainly due to lower warehousing costs; lower stock write downs and lower camp costs (US$207/oz), lower sales related costs due to
LSE:ACA www.acaciamining.com
13
lower sales volumes (US$153/oz), lower maintenance cost (US$153/oz), lower consumables cost (US$152/oz), lower energy and fuel
costs (US$92/oz), lower labour costs due to restructuring (US$66/oz) and lower contracted services costs (US$46/oz).
AISC per ounce sold of US$1,373 was 30% higher than 2016 (US$1,058/oz) driven by the impact of lower sales ounces on individual
cost items (US$533/oz) and higher cash cost as explained above (US$117/oz), partly offset by lower capitalised development costs
(US$218/oz) and lower sustaining capital spend (US$104/oz). Should we have been able to sell all ounces produced, AISC would have
been approximately US$1,122 per ounce.
Capital expenditure for the year before reclamation adjustments amounted to US$49.8 million, 41% lower than 2016 (US$84.6 million).
This was mainly driven by lower sustaining capital expenditure due to the transition of Bulyanhulu to reduced operations and cash
saving initiatives implemented which resulted in projects being deferred or cancelled as well as lower capitalised development driven by
the halt of underground mining activities. Capital expenditure mainly consisted of capitalised underground development costs (US$39.5
million), underground ventilation raise borings (US$1.8 million), paste reticulation (US$1.5 million), ventilation fan upgrades (US$1.3
million) and a power stability project (US$1.2 million).
The transition to reduced operations at Bulyanhulu which was completed in the fourth quarter, regrettably led to the retrenchment of the
majority of the workforce at the mine. In total, the retrenchments, together with the cancellation of supply contracts led to a cost of
US$25 million, with US$20 million incurred in Q4 2017 and the balance due to be incurred in Q1 2018. In addition we saw an outflow of
accounts payable of approximately US$35 million, of which US$5 million is expected to be incurred in Q1 2018. Whilst the mine is on
reduced operations, at a monthly cost of approximately US$3 million, Acacia is taking the opportunity to progress essential capital spend
of approximately US$10 million, primarily on the process plant, together with an optimisation study which is designed to ensure that
when the mine restarts is does so in an optimised manner. The study is expected to take until H2 2018 to be completed and as a result
Acacia does not expect the underground mine to restart in 2018 and is targeting a phased restart through 2019 assuming the
concentrate ban is resolved during 2018. The mine will continue with the re-processing of tailings through 2018 at an annual production
rate of approximately 30,000 ounces and an AISC of approximately US$1,000 per ounce, which will partially offset the cost of reduced
operations.
Buzwagi
Key statistics
Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Key operational information:
Ounces produced oz 73,604 41,912 268,785 161,830
Ounces sold oz 75,520 41,514 160,552 161,202
Cash cost per ounce sold1 US$/oz 535 1,035 594 1,031
AISC per ounce sold1 US$/oz 583 1,056 667 1,095
Copper production Klbs - 2,547 8,991 9,847
Copper sold Klbs - 2,075 752 9,175
Mining information:
Tonnes mined Kt 1,545 5,090 15,368 21,585
Ore tonnes mined Kt 1,321 1,509 9,309 5,317
Processing information:
Ore milled Kt 1,041 1,159 4,256 4,404
Head grade g/t 2.4 1.2 2.1 1.2
Mill recovery % 90.8% 94.5% 94.3% 94.5%
Cash cost per tonne milled1 US$/t 39 37 22 38
Capital Expenditure
- Sustaining capital US$('000) 1,235 264 4,338 3,582
1,235 264 4,338 3,582
- Non-cash reclamation asset adjustments US$('000) (2,192) 3,312 (1,978) 4,524
Total capital expenditure US$('000) (957) 3,576 2,360 8,106
1These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to “Non-IFRS measures” on page 33 for definitions.
LSE:ACA www.acaciamining.com
14
Operating performance
Buzwagi delivered record gold production of 268,785 ounces for 2017 which was 66% higher than in 2016 mainly due to a 75% higher
head grade as a result of higher grade ore mined from the main ore zone at the bottom of pit. Production for the year comprised of
113,035 ounces of gold in concentrate and 155,749 ounces of gold in doré.
Gold sold for the year amounted to 160,552 ounces, in line with 2016 and 40% lower than production, a direct result of the inability to
export concentrate from early March 2017. As a result of this, in September 2017 Buzwagi ceased operating the flotation circuit which had
previously been planned to run into the first part of 2018 but continued to run the existing gravity and CIL circuits which resulted in gold
production for the last 4 months of the year being solely in doré form. Prior to the change, gold/copper concentrate made up approximately
60% of production.
Buzwagi engaged extensively with relevant government agencies regarding the processing trials, both prior to and after the
implementation of the decision to bring forward ceasing operation of the flotation circuit. While ceasing to operate the flotation circuit
did not require prior regulatory approvals and did not involve additional or new process plant or processing technology, Buzwagi has
recently received further correspondence from the Ministry of Minerals requiring the restoration of operation of the flotation circuit and
seeking further explanations from Buzwagi on the Government’s position regarding potentially applicable regulatory approvals. The
Company will continue to engage closely with Government agencies on this and other operating and regulatory issues.
Total tonnes mined of 15.4 million tonnes were 29% lower than 2016, primarily due to the focus of mining at the bottom of the pit which
contains more ore tonnes compared to waste tonnes resulting in 75% higher ore tonnes mined during 2017 compared to 2016.
Copper production of 9.0 million pounds for the year was 9% lower than the comparative period mainly due to the bypass of the flotation
circuit during September 2017 resulting in no copper production for the rest of 2017, partly offset by increased copper grades. Copper sold
was 92% lower than 2016, primarily due to the lack of mineral concentrate exports.
Cash costs for the period of US$594 per ounce sold were 42% lower than 2016 (US$1,031/oz), primarily driven by the build-up in unsold
ounces and increased investment in ore stockpiles as a result of increased focus on ore mining (US$411/oz), lower consumable spend
due to lower unit costs and optimisation of cyanide usage (US$53/oz) and lower sales related cost due to lower sales volumes
(US$25/oz). This was partly offset by lower co-product revenue in the form of copper concentrates (US$123/oz).
AISC per ounce sold of US$667 was 39% lower than 2016 (US$1,095/oz). This was mainly driven by lower cash costs as explained above
(US$437/oz). Should we have been able to sell all ounces produced, AISC would have been approximately US$564 per ounce.
Capital expenditure before reclamation adjustments of US$4.4 million was 21% higher than 2016 (US$3.6 million). Capital expenditure for
the year mainly consisted of the expansion of the tailings storage facility (US$3.7 million).
As previously guided, Buzwagi is transitioning to a stockpile processing operation in 2018 as a result of the effective completion of the
open pit and will see a step down in production as a result. During 2017 the mine exceeded its production plan by 15,000 ounces whilst
delivering over 5 million tonnes of ore to the stockpile, albeit at lower grades. As a result expected life of mine production has increased
by approximately 100,000 ounces. In 2018, mill feed will be almost exclusively from the stockpiles and as a result head grades are
expected to drop significantly resulting in production for the year being approximately 100,000 ounces. As a result of the lower
production and release of non-cash high cost inventory of approximately US$200 per ounce, reported AISC is due to increase to
approximately US$1,100 per ounce sold, although we are looking to optimise the cost profile as we transition to stockpile processing.
LSE:ACA www.acaciamining.com
15
North Mara
Key statistics
Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Key operational information:
Ounces produced Oz 72,018 91,183 323,607 378,443
Ounces sold Oz 71,740 92,975 324,455 376,255
Cash cost per ounce sold1 US$/oz 587 436 498 410
AISC per ounce sold1 US$/oz 903 850 803 733
Open pit:
Tonnes mined Kt 3,572 4,182 15,299 15,556
Ore tonnes mined Kt 798 702 3,147 2,752
Mine grade g/t 1.7 2.1 1.7 1.9
Underground:
Ore tonnes trammed Kt 153 127 654 440
Mine grade g/t 7.7 11.0 8.7 15.6
Processing information:
Ore milled Kt 708 693 2,841 2,830
Head grade g/t 3.5 4.4 3.9 4.5
Mill recovery % 91.5% 92.1% 92.0% 92.0%
Cash cost per tonne milled1 US$/t 59 59 57 55
Capital Expenditure
- Sustaining capital2 US$('000) 5,370 13,739 22,563 28,317
- Capitalised development US$('000) 13,328 21,929 61,066 75,609
- Expansionary capital US$('000) 3,339 1,475 10,270 2,399
22,037 37,143 93,899 106,325
- Non-cash reclamation asset adjustments US$('000) (3,325) 3,319 (2,951) 6,703
Total capital expenditure US$('000) 18,712 40,462 90,948 113,028 1These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ‘Non-IFRS measures” on page 33 for definitions.
2 Includes land purchases recognised as long term prepayments
Operating performance
North Mara’s gold production for the period of 323,607 ounces was 14% lower than in 2016. This was as a result of a 13% lower head grade driven by 44% lower mined grades received from the Gokona Underground due to an increased proportion of ore being sourced from the lower grade West Zone. The head grade was also negatively impacted by 11% lower grades received from the Nyabirama pit as an increased proportion of ore was mined from the beginning of the Stage 4 of the open pit.
As North Mara solely produces gold in doré form it was unaffected by the concentrate ban and gold ounces sold for the year of 324,455 ounces were broadly in line with production, but 14% lower than 2016 due to the lower production base.
Ore tonnes from underground mining were 49% higher than 2016, due to Gokona Underground development providing access to more stopes compared to 2016 despite the underground development challenges experiences in the year due to a now resolved lack of development contractors due to work permit issues. Cemented Aggregate Fill (CAF) continues to be placed in primary stopes, though further work is required on the plant to ensure that forecast fill volumes can be maintained.
Cash costs of US$498 per ounce sold were 21% higher than 2016 (US$410/oz), mainly driven by the lower production base (US$66/oz),
lower capitalised development cost (US$35/oz), higher consumable cost driven by higher CAF activities (US$18/oz) as well as higher
energy and fuel costs (US$11/oz). This was partly offset by a build-up in ore stockpiles due to the higher ore tonnes mined (US$31/oz)
and lower external services cost (US$9/oz).
AISC of US$803 per ounce sold was 10% higher than 2016 (US$733/oz) primarily due to higher cash costs as explained above
(US$88/oz) and the impact of the lower production base (US$51/oz), partly offset by lower capitalised development costs (US$45/oz) and
lower sustaining capital expenditure (US$18/oz).
Capital expenditure for the year before reclamation adjustments of US$94.0 million was 12% lower than in the prior year (US$106.3
million). Key capital expenditure include capitalised stripping costs (US$45.4 million), capitalised underground development costs
LSE:ACA www.acaciamining.com
16
(US$15.7 million), capitalised drilling expenditure mainly relating to Gokona resource and reserve development and Nyabirama
underground studies (US$9.4 million) and investment in mobile equipment and component change-outs (US$4.9 million). In addition,
US$1.6 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 on the balance sheet.
In 2018 we expect production to be broadly in line with 2017 at approximately 325,000 ounces as the continued increase in production
from the Gokona Underground is offset by lower open pit tonnes and grade as the Stage 3 of the open pit is completed and all ore is
sourced from the Stage 4 pit. AISC is expected to be approximately US$850 per ounce, approximately 5% higher than 2017, driven by an
increase in cash costs due to the increased mining activity and increased allocation of corporate shared services costs. During 2018 we
will continue to progress the drilling programmes at Gokona, which led to a doubling of underground reserves in 2017 to 1.3Moz at a
grade of 6.3 g/t and at Nyabirama, we are also progressing the permitting of an underground exploration decline which is expected to be
completed in 2018.
LSE:ACA www.acaciamining.com
17
Exploration Review
Brownfield Exploration
Tanzania
In 2017, brownfield exploration was focused predominantly at North Mara, with underground diamond drilling at Gokona, and further
surface diamond drilling conducted on the Nyabirama deposit to define the mineralised system below the planned final open pit. Drilling
at North Mara during 2017 resulted in significant additions to the Mineral Reserve and Mineral Resource. The surface drilling
demonstrated the potential for further resource potential up to 700 metres below the final Stage 4 Nyabirama pit. Underground drilling
also continued on the Reef 2 series at Bulyanhulu prior to suspension of underground operations.
North Mara
Gokona Underground
In addition to the grade control drilling, approximately 33,000 metres of infill and extensional diamond drilling was completed at Gokona Underground during 2017; with a maximum of 5 underground diamond drill rigs in operation. The positive results from the drilling, were incorporated into the year-end Resource update and led to a doubling of Reserves from 656koz at 6.0g/t to 1,338koz at 6.3g/t, post depletion of over 188koz. Significant drilling activity was focused on delineating the western extension of the “Golden Banana” (East Zone) lode mineralisation between the Gokona Fault and the completed Gokona open pit; which is now termed the “GB2” zone. Several wide and high grade intercepts were returned from this drill programme extending the previously modelled mineralisation including:
UGKD320 33.0m @ 38.2 g/t Au from 36m UGKD321 31.0m @ 14.7 g/t Au from 31m UGKD323 24.8m @ 133.5 g/t Au from 35m UGKD328 52.0m @ 11.4g/t Au from 35m UGKD331 57.0m @ 31.8g/t Au from 54m UGKD349 10.0m @ 75.7g/t Ay from 64m UGKD_00303 26.0m @ 40.8g/t Au from 110m UKGC_00308 23.0m @ 42.7g/t Au from 121m
The full set of drill data for GB2 was incorporated into the updated Mineral Resource model, and development was commenced to access the mineralisation during the Q4 2017, and first stope production scheduled for Q1 2018. The development of a drill drive on the 1030mRL elevation advanced in 2017, with the initial four drill sites completed during Q3 2017. Drilling commenced from three of these positions, with initial drilling targeting continuation of mineralisation below the existing open pit. Initial results received during Q4 2017 included:
UGKD415 22.0m @ 13.3g/t Au from 283m UGKD418 28.0m @ 12.5 g/t Au from 251m UGKD405 46.0m @ 6.6g/t Au from 197m UGKD409 10.0m @ 6.3g/t Au from 78m UGKD410 14.0m @ 7.8g/t Au from 71m UGKD425 15.0m @ 9.5g/t Au from 120m
Exploration activity during 2018 at Gokona Underground will continue to test the extension of the known mineralisation, with 41,000m of underground diamond drilling budgeted.
Nyabirama
Follow-up extensional and infill surface diamond drilling was completed at Nyabirama during 2017, in order to test the extent of
mineralisation down-plunge from the open pit, and allow consideration of an underground mining option. The better results from the
2017 drilling programmes included:
NBD0149A 3.0m @ 66.6 g/t Au from 873m incl. 1m @ 198g/t Au from 874m, and
5.0m @ 4.8 g/t Au from 890m NBD0152 6.0m @ 51.9 g/t Au from 592m incl. 1m @ 280g/t Au from 594m NBD0157 4.0m @ 10.8g/t Au from 264m,
4.0m @ 26.7g/t Au from 325m, and
LSE:ACA www.acaciamining.com
18
7.0m @ 9.50g/t Au from 464m NBD0158 11.5m @ 26.5g/t Au from 272m NBD0166 2.0m @ 87.9 g/t Au from 236m incl. 1m @ 161g/t Au from 237m, and
2.0m @ 6.5 g/t Au from 408m, and 3.0m @ 3.8 g/t Au from 420.0m
NBD0167 5.0m @ 8.5 g/t Au from 464m incl. 1m @ 36g/t Au from 467m, and 7.0m @ 12.8 g/t Au from 473m incl. 1m @ 81g/t Au from 475m
NBD0170 2.4m @ 7.6 g/t Au from 324m, and 5.2m @ 5.9 g/t Au from 366.8m, and 13.5m @ 20.1 g/t Au from 377.5m
Drilling completed in 2016 and 2017 was incorporated into an underground Mineral Resource model. Following the Mineral Resource model update, a provisional underground decline design was developed along with development for drill positions to undertake infill diamond drilling. Permitting for the decline is underway. The conceptual drilling programme involves eight drill positions, and approximately 41,000m of diamond drilling to be completed progressively as the development advances. In order to reduce expenditure commitments, further drilling at Nyabirama was suspended in the Q3 2017. The decision was also taken to defer any drilling until 2019, and hence reduce expenditure commitments in 2018.
Bulyanhulu
Reef 2 Central Underground diamond core drilling in 2017 was primarily focused on infill drilling of Reef 2 to increase the level of confidence in the Mineral Resource, and testing the Reef 1 structure in areas where limited to no historic drill testing has been undertaken. A total of 117 underground diamond drill core holes were completed for 30,412 metres during H1 2017, testing both the Reef 1 and Reef 2 structures. The results demonstrated that the Reef 2m Central vein displays good continuity and extended the mineralisation a further 100m vertically, and a further 150m in strike. Drilling activity at Bulyanhulu was suspended in the second half of 2017, as the mine was moved to Reduced Operations.
Greenfield Exploration
Kenya
During 2017 an extensive diamond drilling programme continued on the Liranda Corridor Project within the Kakamega Dome Camp
with between four and seven drill rigs active. 86 diamond core (“DD”) holes (41,988 meters) were completed on the Isulu (formerly
Acacia), Bushiangala, Shigokho and Shibuname Prospects. Additionally, one reverse circulation (RC) rig completed reconnaissance
drilling across gold-in-soil anomalies on the Barkalare and Kitson-Kerebe target areas in the Lake Zone Gold Camp with 30 reverse
circulation holes (“RC”) (3,250 metres) drilled.
Kakamega Dome Camp
Exploration activity has focused on the Bushiangala and Isulu (formerly Acacia) prospects since high grade results were returned in
2014 from the first pass diamond drilling programme following up gold-in-soil anomalies along the Liranda Corridor. In 2015 and 2016
closed spaced diamond drilling programmes were undertaken confirming multiple zones of mineralisation from 100 metres to 700
metres vertical depth at Isulu and from 100 metres to 400 metres at Bushiangala. In 2017 a diamond drilling program of 44,500m was
budgeted in order to finalise a Maiden Inferred Resource Estimate on the Isulu Prospect in Q1 2017 and to further understand the
potential size of the mineralised zones (lateral and depth extensions). A total of 79 diamond holes for 39,062 metres were completed on
these prospects in 2017. Better results received during 2017 from the Isulu and Bushiangala Prospects included:
Isulu Prospect (formerly Acacia)
LCD0158W1* - 2.5m @ 114 g/t Au from 892m and 1.0m @ 11.0 g/t Au from 898m,
LCD0158W3* – 3.7m @ 10.7 g/t Au from 925m and 0.6m @ 21.0 g/t Au from 931m,
LCD0161W1*† - 2.0m @ 37.0 g/t Au from 995m and 1m @ 21.5 g/t Au from 1,003m,
LCD0161W3* - 2.0m @ 8.49 g/t Au from 958m and 4.0m @ 2.27g/t Au from 972m,
LCD0175*† - 3.0m @ 55.2 g/t Au from 129m,
LCD00194 -1.5m @ 37.2 g/t Au from 342.3m,
LCD00201 -1.5m @ 15.2 g/t Au from 114m.
LSE:ACA www.acaciamining.com
19
Bushiangala Prospect
LCD0173*† - 3.1m @ 7.07 g/t Au from 187m,
LCD0174*† - 3.5m @ 6.70 g/t Au from 154m,
LCD0176*† - 1.5m @ 12.0 g/t Au from 134m and 3.1m @ 12.0 g/t Au from 175m,
LCD0177*† - 1.5m @ 10.5 g/t Au from 114m,
LCD0189* - 2.0m @ 12.7 g/t Au from 164m,
LCD0192* - 2.0m @ 23.1 g/t Au from 166m Note: * - holes reported during Q3 2017.
†Holes included in Q4 2017 Inferred Resource Estimate.
The gold mineralisation at Isulu is associated with mostly steeply dipping shear zones ranging in true width from 0.5 metres to 17
metres within a mafic volcanic sequence. The zones are represented by shearing, brecciation, quartz veining, sulphides (pyrite, +/-
pyrrhotite, +/-sphalerite, +/-arsenopyrite, +/-chalcopyrite, +/- molybdenite) and alteration (carbonate, +/- sericite, +/- vanadium mica, +/-
silica). Within the shears a total of 9 mineralised zones have been modelled with a maximum strike length of 514m. Vertical extent
ranges from 300m to 1000m while the plunge extent ranges from 300m to 1100m. The majority of the resource ounces lie within 4
zones. The structures remain open at depth and to the east down plunge.
At Bushiangala the gold mineralisation is modelled in four zones contained within shears characteristically similar to Isulu. These zones
have a maximum strike length of 304m with a vertical extent ranging from 284m to 556m. The structures continue to the east and down
dip.
In Q1 2017 a Maiden Inferred Resource Estimate conforming to NI 43-101 guidelines was announced for the Isulu prospect, of 3.46
million tonnes at 12.1 g/t Au for 1.31 million ounces. An updated Inferred Resource Estimate was completed using drill data and
interpretations to the end of August 2017; with the updated model showing that the Isulu Inferred Resource has changed with additional
drilling confirming structural complexity.
The enhanced modelling of the Isulu resource has upgraded confidence and increased grade, although has led to reduced ounces.
Additionally the upper parts of two zones in the Bushiangala Prospect were upgraded from mineral inventory to an Inferred Resource
Estimate. The updated Inferred Resource Estimate completed for the year-end returned 2.5 million tonnes @ 12.9 g/t Au for 1.044
million ounces at Isulu and for Bushiangala 374,600 tonnes @ 10.5 g/t Au for 126,600 ounces. A technical study to determine
mineability of these deposits was commenced in Q4 2017. We continue to believe that 2Moz is a resource target for the Liranda
Corridor Project which we plan to continue drill testing for in 2018.
In 2017 testing for further potential shoots within 5km along strike from existing resources at Isulu and Bushiangala was undertaken. At
Shigokho and Shibuname Prospects 7 holes were completed for 2924m. Best results were from Shibuname included LCD0181 6.6m @
3.12 g/t Au from 200.4m and 3m @ 4.71 g/t Au from 218m, LCD0183 0.6m @ 3.48 g/t Au from 400.9m. Although encouraging more
detailed structural work is required to understand the potential of these prospects and if further drilling is warranted.
Lake Zone Camp
RC drilling on gold-in-soil anomalies at Barkalare and Kitson-Kerebe Target areas was completed in Q3 2017 with 30 RC holes for
3250m. Best intercept included LZRC0088 (Barkalare) 4m @ 5.43 g/t Au from 52m and LZRC0097 (Kerebe) 5m @ 3.09 g/t Au from
23m and 2m @ 10.05 g/t Au from 60m. In 2018, drill testing of these significant intercepts along strike and down dip will be undertaken.
In addition further geological mapping and infill soil sampling across untested soil anomalies within the Lake Zone is underway to bring
these targets to drill testing stage.
Burkina Faso
During 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.
Extensive drilling programmes, including diamond, reverse circulation and air-core drilling, were completed in 2017 on the projects. A
component of the 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, most of them were followed up by field mapping in Q4. This program was aimed to produce
additional geology data to update the target ranking and to design 2018 exploration.
LSE:ACA www.acaciamining.com
20
South Houndé Joint Venture (Sarama Resources Limited) – current ownership 50%, next stage earn-in to 70% (end 2018)
At the South Houndé JV project we continued field-based exploration activities focused both on resource extensions to the Tankoro
Resource area (MM and MC zones), the Tankoro Corridor prospects (Tankoro SW, Guy, Phantom and Phantom East) and regional
targets (Ouangoro, Tyikoro, Poyo/Werienkera and Bini West). Acacia commenced management of the South Houndé JV as of 1st
January 2017. During 2017 a total of 34,165 metres AC, 3,051 metres of RC and 6,664 metres of diamond core were drilled. Mapping
and surface sampling was conducted on the regional prospects.
Field mapping and sampling focused on the best targets on the Tankoro Corridor and on regional prospects. The ranking of the targets
has been updated and an exploration programme was designed for 2018.
The exploration budget for the South Houndé project in 2018 is US$3.8 million, comprising 7,000 metres of diamond core drilling, 8,000
metres of reverse circulation drilling, and 32,000 metres of aircore drilling. A resource update is planned for Q1 2018. Additionally
mapping, soil sampling and pole-dipole gradient array induced polarisation geophysical surveys will be carried-out. The aim of this
programme is to extend current resource on the Tankoro corridor and to assess the potential of the regional targets to deliver a new
large-scale gold deposit, or at a minimum several satellite ore bodies, capable of positively impacting the quality, size and economics of
the global resources on the Project.
Tankoro - MM and MC Zones
During 2017 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, Anakin and Jabba zones within the MM and MC parallel mineralised zones. All holes drilled to date have intersected the targeted porphyries and cross structures, however, in most cases the interpreted high-grade shoots are either of lower grade, or of shorter strike extent than expected. The best potential at this stage appears to be depth extensions on the MC Zone where drilling has identified multiple mineralised porphyries and gold mineralisation in the surrounding intercalated sediments.
Better results from MM and MC Zone included:
FRC1070 - 11.35m @ 3.50g/t Au from 397.5m including 6.5m @ 5.02g/t Au
FRC1075 - 6.86m @ 6.83g/t Au from 173.15m including 2m @ 18.8g/t Au, and 3.35m @ 8.17g/t Au from 236.5m
FRC1076 - 3.2m @ 22.5g/t Au from 231m,
FRC1083A - 3.5m @ 3.79g/t Au from 406.5m (including 1m @ 8.75g/t Au), 1.85m @ 8.03g/t Au from 429.85m and 1.05m @ 5.19g/t Au from 504m;
FRC1076 - 6m @ 11.9g/t Au from 231m, 6.7m @ 3.80g/t Au from 240.8m (including 4m @ 6.12g/t Au)
Phantom East - FRC1081 - 1.85m @ 6.83g/t Au from 173.65m;
Phantom East - FRC1053RE1 - 5.5m @ 4.88g/t Au from 120m and 9m @ 4.85g/t Au from 129.5m,
Phantom - FRC1088 - 2.45m @ 2.42g/t Au from 145.4m,
Phantom West - FRC1091 - 4.25m @ 2.12g/t Au from 248.45m.
The geology model for the Tankoro resource has been updated in Q4 2017. Early in 2018 a mineral resource estimation update is
expected to be completed along with additional metallurgic test work. 2018’s drilling programme across the resource area, will follow-up
on the most prospective deep high-grade shoots, locate repetitions of high grade shoots by in-filling existing drill fences and test
partially tested geophysics trends.
At Djimbake (south-western extension of the Tankoro resource area) detailed geology and regolith mapping, associated with rock-chip
and termite mound sampling, was carried-out to assist with the interpretation of the soil and recent drilling data. The 2018 programme
will consist of follow-up aircore and reverse circulation drilling to test the continuity of the mineralisation along strike and at depth.
On the Ben potential new mineralised trend, located West of the resource area, detailed mapping and rock-chip and termite mound
sampling showed the presence of significant hydrothermal alteration associated with strong foliation. The 2018 programme will consist
of gradient array induced polarisation geophysical surveys, additional soil sampling and following aircore drilling.
LSE:ACA www.acaciamining.com
21
Ouangoro Anomaly
Aircore drilling commenced at the beginning of February on the Ouangoro Anomaly with regional 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
being drilled. Encouraging results have been returned from all traverses but so far no economic grade has been encountered.
Gold mineralisation and anomalism in drill chips, and observed in artisanal workings, is typically associated with quartz veins in sheared siltstone and sandstone units intruded by interpreted quartz-feldspar porphyries, with fresher drill chips show carbonate and silica-sericite alteration. Q4 2017 field activity mostly focused on the 5km long Yankadi zone which represents the best continuity of gold mineralisation and hydrothermal alteration along the corridor.
Detailed geology and regolith mapping, associated with rock-chip and termite mound sampling, confirmed the presence of strong
hydrothermal alteration, prospective cross-cutting structures and significant artisanal mining workings. The 2018 programme will consist
of gradient array induced polarisation geophysical surveys, aircore, reverse circulation and diamond drilling. The aim of the programme
is to confirm the continuity of the mineralisation.
Tankoro Southwest Extension
AC drilling was completed across multiple IP-geophysical and gold-soil geochemical targets on the southwest extensions of the
Tankoro resource trend, known as the Djimbake area. The drilling was following up anomalous AC drill results from 2016, testing the
southern extension of the Kenobi Trend, and testing for new mineralised zones. Assay results were encouraging and included:
4m @ 1.46g/t Au 10m @ 1.73g/t Au
8m @ 1.19g/t Au 4m @ 1.17g/t Au
8m @ 2.57g/t Au 8m @ 4.25g/t Au
6m @ 1.33g/t Au 6m @ 1.99g/t Au
Gold anomalism in the AC drilling occurs in weathered and altered sediments and porphyritic intrusive rocks with observed alteration
being carbonate, sericite and kaolinite; minor quartz veining was also observed co-incident with some better zones of gold anomalism.
Planned follow-up drilling includes infill and step-out AC traverses as well as some RC and diamond core drilling to determine the
significance of the shallow oxide gold mineralisation and orientation/controls in fresh rock.
Central Houndé Joint Venture – current ownership 51%, potential to earn 80%
Surface geochemical sampling undertaken has identified several very encouraging zones of gold anomalism coincident with the
interpreted NE-trending Legue-Bongui structural corridor, including an 8km x 2km anomalous gold zone. Additional interpretative work
has identified 35 targets associated with mapped alteration, artisanal sites, mineralised rock chips and/or pathfinder geochemistry
warranting follow-up. During mapping a number of west-north west trending mineralised structures were identified in the Legue NW
Corridor, and rock chips taken along these structures returned a number of significant results. In total 21 of 49 rock chip samples
returned assays >0.1g/t up to 77.4g/t gold, including assays of 5.95g/t, 19.1g/t, 28.1g/t, 62.8g/t and 77.4g/t. The anomalous rock chip
samples are associated with sheared mafic volcanic rocks and boudinaged quartz vein zones.
Reverse circulation drilling was completed in the Legué-Bongui Corridor to follow-up best results from previous drilling. 21 RC holes
were drilled for an aggregate of 2,797 metres. Best results are:
CHRC00050- 6m @ 0.57g/t Au from 80m, including 2m @ 1.19g/t Au; 2m @ 1.83 g/t Au from 95m and 2m from 1.83g/t Au, including 1m @ 2.47g/t Au (ended in mineralisation)
CHRC00051- 7m @ 0,97g/t Au from 144m, including 3m @ 1.88g/t Au
CHRC00052- 12m @ 1.40 g/t Au from 59 m, including 3m @ 2.60g/t Au from 66m and 1m @ 4.03g/t from 67m and 13m @ 0.69g/t Au from 87m including 7m @ 1g/t Au from 82m
CHRC00054- 16m @ 0.51g/t Au from 61m including 5m @ 1.01g/t Au from 77m
CHRC00056- 1m @ 1.58g/t Au from 7m.
The exploration programme for the Central Houndé project in 2018 comprises 11,500 metres of aircore drilling. Elements of the drilling
will be converted to reverse circulation drilling if the regolith profile is stripped. Additional geology and regolith mapping, soil sampling
and gradient array induced polarisation geophysical surveys are also comprised in the plan. The aim of the programme is to advance
targets to drill testing phase (Légué-Bongui Corridor and Ouéré) and to delineate new exploration targets.
LSE:ACA www.acaciamining.com
22
Pinarello & Konkolikan Joint Venture (Canyon Resources Limited)
During 2017 Acacia has earned 75% equity in the project and we have therefore entered the contributory/dilution phase of the JV
agreement. Canyon Resources, our joint venture partner has elected to dilute, and the current programmes will increase Acacia ’s
equity to approximately 89%.
Surface geochemical sampling undertaken over the past 2 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.
A total of 1,073 soil samples, 23,089 metres of aircore drilling and 6,401 metres of RC drilling have been completed during 2017. Results from aircore drilling along the Tangalobe and Tankoro Corridor South is considered positive with better results of:
3m @ 0.77g/t
3m @ 0.72g/t Au
4m @ 1.64g/t Au
2m @ 6.0g/t Au
6.0m @ 1.18 g/t Au
8m @ 0.52g/t Au
Mineralisation is mostly associated with quartz veins, oxidised sulphides and haematite.
Results from RC drilling were mixed with broad zones of gold anomalism and narrow higher grade zones intersected at the Gaghny
Prospect whilst hole PIRC0039 on the northern Pinarello licence following up the projected extension of the Tankoro Trend intersected
6m @ 11.1g/t Au from 28m, including 2m @ 32.4g/t Au from 28m. An infill soil sampling program was completed in Q4 on the Niodera
license. A total of 1,252 samples were collected. Last results are still awaited. Processing and interpretation of the results will be done
early next year.
The exploration plan for the Pinarello & Konkolikan project in 2018 comprises 30,000 metres of aircore drilling. Part of the drilling will be
converted to reverse circulation drilling if the regolith profile is stripped. The aim of the program is to push more advance targets to
target testing phase (Tankoro Corridor South, Tangolobe and Gagnhy) and to delineate new exploration targets.
Frontier JV (Metallor SA) – earning 100% through option payments
Regional regolith and geological mapping has been completed for both licences (Badoura and Canra). A regional 800m x 400m reconnaissance BLEG soil sampling programme, combined with termite mound, rock chip and quartz lag sampling programmes has been completed. This work has identified a number of significant large scale gold-in-soil anomalies (soils up to 3g/t Au). A 200m x 200m infill commenced but has been completed. A total of 6,035 soil, 44 rock chip and 1,043 termite samples were collected during. In addition to this a detailed structural magnetic interpretation and targeting exercise was done. This interpretation integrated geological and regolith mapping, Landsat, Aster and recently acquired high resolution airborne magnetic and radiometric data. A number of high quality targets have been selected for reconnaissance Aircore drilling. An infill soil sampling program was completed in Q4 on the Badoura license. A total of 1,013 samples were collected. Processing and interpretation of the results will be done Q1, 2018. The exploration budget for the Frontier project in 2018 comprises 6,000 metres of aircore drilling. Part of the drilling will be converted to reverse circulation drilling if the regolith profile is stripped. The aim of the programme is to delineate new exploration targets.
Mali
In Mali we continued to delineate surface gold-in-soil anomalies, already defined in late 2016, through mapping and surface IP
geophysical surveys, and commenced drilling programmes on the resultant targets. 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 5 exploration permits covering 191km2 on the SMSZ.
LSE:ACA www.acaciamining.com
23
Tintinba - Bane Project – earning 95% through option payments
The Tintinba-Bane Project consists of three permits covering approximately 150km2. These properties are located within the Kénéiba
Inlier of Western Mali, along the world class Senegal-Mali-Shear-Zone (SMSZ), which hosts more than 50 million ounces of gold
endowment. During the year, 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 25 targets with co-incident IP chargeability, resistivity, and surface gold-in-soil anomalism have been
identified. RC drilling commenced in mid-March 2017 aimed at testing around 18 targets in total with single drill fences to test for gold
mineralisation and to understand the geology and alteration of each target in order to rank these targets moving forward. RC drilling
has returned positive results, from 8 of 13 gold anomalies, including:
4m @ 18.7g/t Au
4m @ 5.62g/t Au
13m @ 1.11g/t Au
15m @ 0.50g/t Au
13m @ 0.50g/t Au
7m @ 1.01g/t Au
Given the discovery history of several >3Moz deposits in the SMSZ, these results and the associated alteration on essentially single
RC fences, across large-scale gold-in-soil anomalies can be considered very significant and warrant follow-up drilling
Reverse circulation drilling continued on selected targets in Q4 2017 with 42 holes for 4,987 meters. Drilling started on November 26th
and ended on January 5th
. The aim of the drilling was to follow-up best mineralised intersections from H1 drilling (Zadie and Manjro
targets) and to delineate new targets (Karité, Tribala and Sounsou). Best results are below with parts of the assays still outstanding:
2m @ 2.14g/t Au
4m @ 1.44g/t Au
3m @ 0.95g/t Au
1m @ 5.51g/t Au
1m @ 5.51g/t Au
Portable XRF analysis of soil and drilling samples was completed in Q4 2017. The interpretation of the results showed that gold
anomalies sit on or close to different “lineaments” (regional trends, splays and possibly conjugate shears). The exploration budget for
the Tintinba - Bane project in 2018 comprises 1,500m of diamond drilling and 10,000m of reverse circulation drilling. The program will
be revised when all results from the Q4 2017 drilling is received and interpreted. The aim of the programme is to push the best targets
(Manjor, Zadie) to advanced exploration stage and to continue testing other targets (Néré, Goni, Karité, Tribala, Sounsou and
Bouyagui).
Bourdala JV – earning 100% through option payments
The Bourdala JV is a joint venture with a local company over the Bou Bou licence located approximately 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% of the project through a series of staged payments over
a period of 36 months.
During 2017, six RC holes for 800 metres were completed across the Bou Bou Artisanal Prospect on the Bourdala JV licence. These
returned anomalous results including: BORC005: 64m @ 0.23g/t from 10m, BORC004: 26m @ 0.31g/t from 72m and 26m @ 0.58g/t
from 104m. These results are encouraging given that the results occur in consecutive holes on the drill traverse and define a 50 metre
wide zone of gold anomalism, within a 2km long artisanal site.
The exploration plan for the Bourdala JV in 2018 comprises 1,200m of reverse circulation drilling, 1,500m of air-core drilling and 2,000
soil samples. The aim of the programme is to follow-up the mineralised intersects from H1 drilling and to generate new targets.
Gourbassi Est – 100% Acacia (ABD Exploration Mali SARL)
During H1 2017, the Gourbassi Est convention was signed and arête for the licence was received. The licence is located immediately
west of the Tintinba/Bane Project 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 SMSZ. The programme for H2 2017 was to review the historic
data and complete mapping and surface sampling programmes.
LSE:ACA www.acaciamining.com
24
The exploration plan for the Gourbassi project in 2018 comprises 1,500m of air-core drilling and 3,000 soil samples. The aim of the
programme is to generate exploration targets.
Tanzania
Nyanzaga Joint Venture
During the period, 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$287 million, which includes a US$33 million
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 (excluding initial capital expenditure). Acacia and
OreCorp have agreed the scope of the Definitive Feasibility Study (“DFS”) and this commenced in the Q2 2017.
OreCorp and Acacia continue to review and seek advice on the impact of the new legislation in Tanzania on the Nyanzaga Project.
OreCorp has published an analysis of their preliminary view of the impact of the legislation which can be found on their website
(www.orecorp.com.au) and indicates that the legislation may potentially have an adverse effect on the Nyanzaga Project. As a result we
have recorded an impairment charge of US$12 million for the Nyanzaga Project to reflect the current estimate for the potential impact of
the new mining laws on the carrying value of the project, which now stands at US$34 million.
LSE:ACA www.acaciamining.com
25
Financial Review
The impact of the gold/copper concentrate export ban is evident in our financial performance, and most notably in cash flow generation.
However, in an effort to minimising the impact, we have further increased our focus on cost control, cash flow management and capital
allocation. The key aspects of our financial performance for 2017 is summarised below, and should be read in conjunction with the
consolidated condensed financial information:
Revenue of US$751.5 million was US$302.0 million lower than 2016 driven by the 27% decrease in sales volumes mainly as a result of our inability to sell gold/copper concentrate which deferred approximately US$264.0 million in gross revenue and reduced production at Bulyanhulu due to the transition to reduced operations in Q4 2017. This was partially offset by approximately US$11.3 million due to the higher gold price compared to 2016.
Cash costs decreased to US$587 per ounce sold in 2017 from US$640 per ounce sold in 2016 despite the lower production base, lower cash costs were driven by lower G&A costs, lower consumable and maintenance costs, lower sales related costs, lower fuel costs, lower external services costs, higher realised gains on copper hedges and lower labour costs, partly offset by the lower production base, lower co-product revenue and lower capitalisation of development costs.
AISC of US$875 per ounce sold was 9% lower than in 2016 (US$958 per ounce sold), mainly due to lower capitalised development cost, lower sustaining capital expenditure, the share based payment credit driven by the decrease in the Acacia share price and lower cash costs, partly offset by the impact of lower sales volumes on individual cost items.
As a result of the above and in combination with higher corporate administration charges driven by higher legal costs due to the concentrate export ban and outstanding tax matters, EBITDA decreased by 38% to US$257.2 million.
Gross impairment charges of US$850.2 million (net US$644.3 million) following the carrying value review conducted in light of changes in the operating environment in Tanzania, and by reference to the key terms of the Framework announcements made by Barrick and by the GoT in October 2017. This is made up of US$838.0 million relating to Bulyanhulu and US$12.2 million relating to Nyanzaga.
Tax credit of US$2.3 million compared to the prior year expense of US$147.1 million. The current year charge is driven by additional provisions raised for uncertain tax positions of US$172 million based on estimates of the impact of a comprehensive settlement reflecting the key terms of the Framework announcements by Barrick and the GoT, offset by the deferred tax impact relating to impairment charges noted above of US$205.9 million;
As a result of the above, the net loss amounted to US$707.4 million, compared to net income in 2016 of US$94.4 million.
Adjusted net earnings of US$146.2 million were US$14.8 million lower than 2016. Adjusted earnings per share amounted to US35.7 cents, down from US39.2 cents in 2016.
Operational cash outflows of US$23.0 million compared to US$318.0 million of inflows in 2016, primarily as a result of lower revenue as discussed above, unfavourable working capital outflows due to a build-up of gold inventory and supplies, an increase in the indirect taxes receivable, and payments of US$37.9 million relating to provisional 2017 and final 2016 corporate tax.
The following review provides a detailed analysis of our consolidated results for the 12 months ended 31 December 2017 and the main
factors affecting financial performance. It should be read in conjunction with the unaudited consolidated financial information and
accompanying notes on pages 38 to 64, which have been prepared in accordance with International Financial Reporting Standards as
adopted for use in the European Union (“IFRS”).
Revenue
Revenue for 2017 of US$751.5 million was US$302.0 million lower than 2016 due to a 27% decrease in gold sales volumes from
Bulyanhulu and Buzwagi (223koz), primarily driven by the ban on export of mineral concentrates from early March 2017, and reduced
production at Bulyanhulu due to the transition to reduced operations in Q4 2017, partly offset by a 2% increase in the average net
realised gold price from US$1,240 per ounce sold in 2016 to US$1,260/oz in 2017.
The net realised gold price for the year of US$1,260/oz was US$3/oz higher than the average market price of US$1,257/oz due to the
impact of gold price protection measures in the form of put options entered into in September 2017 of US$2.7 million. These options
had a strike price of US$1,300 with full exposure to gold prices above that level.
Included in total revenue is co-product revenue of US$7.2 million for the 2017 year, 82% lower than the prior period (US$39.1 million).
This was as a result of the lack of concentrate sales from March 2017 as a result of the export ban relating to gold/copper concentrate.
The 2017 average realised copper price of US$2.98 per pound compared favourably to that of 2016 (US$2.21 per pound), and was
mainly driven by the higher market price for copper. The benefit of a higher copper price is however not fully reflected in 2017 revenues
due to the inability to sell copper.
The impact of the ban during the year has resulted in a build-up of approximately 185,800 ounces of gold contained in unsold
concentrate. In addition, we have approximately 12.1 million pounds of copper and 158,900 ounces of silver contained in unsold
LSE:ACA www.acaciamining.com
26
concentrate. If these had been sold, gross revenue and cash flow would have increased by approximately US$264.0 million and
US$240.0 million respectively based on average spot prices in the year.
Cost of sales
Cost of sales was US$458.4 million for 2017, representing a decrease of 37% on the prior year period (US$727.1 million). The key
aspects impacting the cost of sales for the year include a 37% reduction in direct mining costs, primarily driven by higher capitalised
mining costs including a credit of approximately US$94.2 million relating to a build-up of finished gold ounces, combined with lower
activity at Bulyanhulu due to the move to reduced operations, lower depreciation and amortisation costs as a result of the lower
production base at Bulyanhulu and lower sales related cost due to lower sales volumes, partly offset by higher realised gains on gold put
options.
The table below provides a breakdown of cost of sales:
(US$'000) Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Cost of Sales
Direct mining costs1 70,773 132,937 299,591 479,022
Third party smelting and refining fees 1,439 6,360 9,675 25,588
Realised losses on economic hedges 128 1,004 743 9,619
Realised (gains)/losses on gold hedges (2,693) 487 (2,693) 1,818
Royalty expense 14,035 11,808 44,930 47,237
Depreciation and amortisation* 25,260 43,718 106,201 163,796
Total 108,942 196,314 458,447 727,080
1 Net of Bulyanhulu reduced operations cost (ROP).
* Depreciation and amortisation includes debits relating to the depreciation component of the cost of the draw down in the quarter of US$0.1 million for Q4 2017 (Q4 2016: US$3.0 million) and credits due to the cost build-up in inventory US$26.9
million for 2017 (2016: US$2.6 million).
A detailed breakdown of direct mining expenses is shown in the table below:
(US$'000)
Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Direct mining costs
Labour
14,067 24,006 83,238 90,013
Energy and fuel
15,454 24,082 80,461 89,757
Consumables
15,855 26,248 85,698 105,152
Maintenance
16,576 30,807 92,603 111,451
Contracted services
24,788 37,226 124,592 133,734
General administration costs
15,620 23,541 77,546 86,761
Gross direct mining costs
102,360 165,910 544,138 616,868
Bulyanhulu Reduced Operations cost1 (13,687) - (14,227) -
Capitalised mining costs
(17,900) (32,973) (230,320) (137,846)
Total direct mining costs
70,773 132,937 299,591 479,022 1 Includes non-sustaining costs relating to Bulyanhulu reduced operations cost (ROP).
Gross direct mining costs of US$544.1 million for 2017 were 12% lower than 2016 (US$616.9 million). The overall decrease was driven
by the following:
A 11% decrease in G&A costs driven by lower stock write downs, lower logistic and warehousing cost and lower camp costs at
Bulyanhulu as well as lower aviation costs at all sites;
A 19% decrease in consumable costs mainly driven by lower usage at Bulyanhulu and improved consumable unit costing and
usage optimisation at other sites;
A 17% decrease in maintenance costs mainly at Bulyanhulu due to the transition to reduced operations in combination with
initiatives to improve planned maintenance activities;
A 10% decrease in energy and fuel costs mainly driven by lower usage at Bulyanhulu and improved supply of Tanesco;
LSE:ACA www.acaciamining.com
27
A 8% decrease in labour costs mainly at Bulyanhulu due to a decrease in headcounts as part of the transitioning to reduced
operations
A 7% decrease in contracted services mainly at Bulyanhulu due to the transition to reduced operations resulting in the halting of
underground mining and development activities.
Capitalised direct mining costs, consisting of capitalised development costs and investment in inventory is made up as follows:
(US$'000)
Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Capitalised direct mining costs
Capitalised development costs
(12,212) (33,704) (89,388) (119,905)
Investment in inventory
(5,688) 731 (140,932) (17,941)
Total capitalised direct mining costs
(17,900) (32,973) (230,320) (137,846)
Capitalised direct mining costs were 67% higher than 2016, primarily driven by a build-up of gold ounces in concentrate at Bulyanhulu
and Buzwagi resulting in an investment in inventory of US$140.9 million. The decrease in capitalised development cost mainly relate to
halting of development activities at Bulyanhulu following the transition to reduced operations, and at North Mara, due to a decrease in
capitalised stripping relating to the Nyabirama Cut 4 cutback and lower underground waste development.
Central costs
Total central costs amounted to US$18.7 million for 2017, a 64% decrease on 2016 (US$51.8 million) mainly driven by a non-cash share
based payment revaluation credit as a result of the lower share price and share price performance compared to 2016, specifically when
compared to our peers and the global mining index, impacting on the valuation of future share-based payment liabilities to employees.
Acacia’s share price decreased by approximately 47% compared to December 2016. This was partly offset by a 23% increase in
corporate administration costs as a result of higher legal costs amounting to approximately US$10 million relating to the concentrate
export ban and other matters.
(US$'000)
Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Corporate administration
7,613 6,218 26,913 21,895
Share-based payments
186 (9,795) (8,236) 29,929
Total central costs
7,799 (3,575) 18,677 51,824
Exploration and evaluation costs
Exploration and evaluation costs of US$24.8 million were incurred in 2017, marginally higher than the US$24.0 million spent in 2016. The
key focus areas for the year were greenfield exploration programmes in West Kenya amounting to US$12.9 million and greenfield
exploration programmes in West Africa amounting to US$10.3 million.
Corporate social responsibility expenses
Corporate social responsibility costs incurred in 2017 amounted to US$8.2 million compared to the prior year of US$10.7 million.
Corporate social responsibility overheads and central initiatives in 2017 amounted to US$4.6 million and were in line with 2016. In
addition, general community projects funded from the Acacia Maendeleo Fund amounted to US$3.6 million, which was US$2.5 million
lower than in 2016, driven by the timing of projects and the number of qualifying initiatives identified. Impairment charges
Acacia has identified a number of potential triggers for impairment testing of the carrying value of its assets, including but not limited to,
the challenges experienced in the operating environment in Tanzania, the announcement of new legislation by the GoT in respect of
the natural resources sector and Acacia’s decision to reduce operations at Bulyanhulu, As a result, Acacia has undertaken a carrying
value review of the Group’s affected Cash Generating Units (CGUs).
LSE:ACA www.acaciamining.com
28
Acacia considers that in accordance with applicable accounting standards, carrying values for the CGUs should now be calculated by
reference to the key terms of the Framework announcements made by Barrick and by the GoT in October 2017 and discussed above,
with additional discounting to reflect the uncertainty around the final terms of any comprehensive settlement that might be reached.
The review demonstrates a potential reduction in value at all three assets, but Buzwagi and North Mara have sufficient headroom
above their current carrying values. At Bulyanhulu, however, the impact of the changes was greater, due to the long life of the mine and
the delay to a return to positive cash generation including due to the move to reduced operations. The review resulted in a net
impairment of US$632 million for Bulyanhulu, which includes pre-tax write-downs of US$122 million for goodwill and US$30 million for
supplies inventory (2016: no impairment). In addition we have recorded an impairment charge of US$12 million for the Nyanzaga
Project to reflect the impact of the new Mining Laws on the carrying value of the project, which now stands at US$34 million. On a
gross basis, and before taking into account the impact of a reduced asset base on deferred tax liabilities, the total impairment charge
amounted to US$850 million.
Other charges
Other charges in 2017 amounted to US$90.4 million, compared to an income of US$11.6 million in 2016. The main contributors include
Bulyanhulu non sustaining costs (US$13.9 million), Bulyanhulu stock obsolescence (US$7.5 million) and Bulyanhulu contractor exit and
demobilisation cost (US$4.9 million). Retrenchment costs of US$25.1 million mainly relating to Bulyanhulu reduced operations
(US$16.9 million), discounting of indirect taxes US$13.3 million, legal costs of US$14.4 million mainly relating to the concentrate export
ban and other matters, once-off legal settlements of US$5.0 million relating to the MDM settlement, foreign exchange losses of US$2.7
million and project development costs of US$1.5 million. The charges were partly offset by income of US$1.8 million generated through
the sale of a mineral royalty previously held by Acacia and the Houndé royalty income received of US$1.6 million.
All costs not classified as ongoing operating costs were allocated to the new cost category called ‘reduced operations costs’ (ROP) and
will be included in other charges, and do not form part of AISC for Bulyanhulu or the group (US$ 24.8 million). The costs reallocated to
reduced operations include all UG mining costs and processing costs as well as site overheads such as shift transportation, health and
safety and environmental costs, camp cost and security costs were systematically reallocated based on headcounts.
Finance expense and income
Finance expense of US$12.4 million for 2017 was 12% higher than 2016 (US$11.0 million). The key components were borrowing costs
relating to the Bulyanhulu CIL facility (US$2.9 million) which were lower than the prior year due to a lower outstanding facility following
repayments, higher accretion expenses of US$3.4 million relating to the discounting of the environmental reclamation liability, US$2.3
million relating to the servicing of the US$150 million undrawn revolving credit facility and the US$2.1 million premium paid on gold put
options. Other costs include bank charges and interest on finance leases US$0.2 million.
Finance income relates predominantly to interest charged on non-current receivables and interest received on money market funds.
Refer to note 9 of the condensed financial information for details.
Taxation matters
The total income tax credit of US$2.3 million is lower than the prior year tax expense of US$147.1 million. The current year tax credit
comprised of deferred tax credits of US$209.9 million (2016: US$55.9 million) driven primarily by the tax impact of the impairment
charge (US$205.9 million) which reflects movements in temporary differences, partly offset by current tax charges of US$207.7 million
(2016: US$91.2 million) predominantly made up of the additional tax provisions raised of US$172 million for uncertain tax positions for
the operating companies based on estimates of the impact of a comprehensive settlement reflecting the key terms of the Framework
announcements by Barrick and the GoT and current year income tax for North Mara of US$35.7 million driven by year to date
profitability. This brings total provisions for Acacia’s uncertain tax positions to US$300 million. The tax expense for 2016 of US$147.1
million included US$69.9 million relating to uncertain tax positions raised for historical tax disputes. The effective tax rate in 2017
amounted to 0.4% compared to 61% in 2016, as a result of the above.
During 2017, we made provisional corporate tax payments of US$34.6 million relating to North Mara, as well as a US$3.3 million final
corporate tax payment relating to 2016 final tax assessments. These provisional and final corporate tax payments have been offset
against the indirect tax receivable covered under the Memorandum of Settlement entered into with the Tanzanian Government in 2011,
and as a result, were not paid in cash. In addition, during 2017 we have also made a corporate tax deposit payment of US$9.5 million
relating to an advance payment relating to a dispute raised on claimed historical North Mara taxes, which was paid in cash.
LSE:ACA www.acaciamining.com
29
Net earnings and earnings per share
As a result of the factors discussed above, the net loss for 2017 was US$707.4 million, against the prior year earnings of US$94.9
million.
The loss per share for 2017 amounted to US172.5 cents, a decrease of US195.7 cents from the prior year earnings per share of US23.2 cents. The decrease was driven by the lower earnings, with no change in the underlying issued shares. Adjusted net earnings and adjusted earnings per share
Adjusted net earnings were US$146.2 million compared to US$161.0 million in 2016. Net earnings in the period as described above have
been adjusted for the impact of items such as impairment charges, prior year tax provisions, discounting of indirect tax receivables,
restructuring costs, insurance proceeds, legal settlements as well as Bulyanhulu reduced operations cost. Refer to page 36 for
reconciliation between net profit and adjusted net earnings.
Adjusted earnings per share for 2017 amounted to US35.7 cents, a decrease of US3.5 cents from 2016 adjusted earnings per share of
US39.2 cents.
Financial position
Acacia had cash and cash equivalents on hand of US$80.5 million as at 31 December 2017 (US$317.8 million as at 31 December 2016).
The Group’s cash and cash equivalents are with counterparties whom the Group considers to have an appropriate credit rating. Location
of credit risk is determined by physical location of the bank branch or counterparty. Investments are held mainly in United States dollars,
with cash and cash equivalents in other foreign currencies maintained for operational requirements.
During 2013, a US$142 million facility (“Facility”) was put in place to fund the bulk of the costs of the construction of the Bulyanhulu
tailings retreatment project (“Project”). The Facility is collateralised by the Project, and has a term of seven years with a spread over Libor
of 250 basis points. The seven year Facility is repayable in equal instalments (bi-annual) over the term of the Facility, after a two year
repayment holiday period. The interest rate has been fixed at 3.6% through the use of an interest rate swap. The full facility of US$142
million was drawn in 2013. During 2017, the 4th and 5
th repayment amounting to US$28.4 million in total was made. At 31 December
2017, the outstanding capital balance is US$71.0 million (31 December 2016 US$99.4 million).
As at 31 December 2017 (and to date), the existing revolving credit facility of US$150 million, which runs until November 2019, remained undrawn.
The net book value of property, plant and equipment decreased from US$1.44 billion as at 31 December 2016 to US$0.77 billion as at 31
December 2017 as a result of an impairment charge booked in 2017 of US$686.4 million. The main capital expenditure drivers have
been explained above, and have been offset by depreciation charges of US$126.0 million. Refer to note 13 to the condensed financial
information for further details.
The current portion of inventories increased from US$184.3 million as at 31 December 2017 to US$291.9 million as at 31 December
2017. This was due to an increase of US$124.7 million in finished goods, mainly relating to gold in concentrate. Total gold ounces on
hand of 192,290 ounces as at 31 December 2017 comprised 185,772 ounces of gold in unsold concentrate and 6,518 ounces of gold in
doré.
Total indirect tax receivables increased from US$136.4 million as at 31 December 2016 to US$170.7 million as at 31 December 2017.
The increase was mainly due to a build-up in VAT receivable as no VAT refunds were received during 2017, with all submitted VAT
returns still the subject of ongoing audits by the Tanzanian Revenue Authority. Our gross increase in receivables, before the corporate
tax prepayment offset, amounted to approximately US$89.5 million. This was partly offset by provisional and final corporate tax payments
of US$37.9 million, discounting of indirect taxes of US$13.3 million and revaluation losses with the net increase in receivables being
US$47.6 million.
The net deferred tax position was a liability of US$140.0 million as at 31 December 2016 compared to the asset of US$70.0 million as at
31 December 2017. This was mainly as a result of the US$205.9 million tax effect of the impairment charges.
Net assets decreased from US$1.86 billion as at 31 December 2016 to US$1.12 billion as at 31 December 2017. The decrease reflects
the current year loss of US$707.4 million and the payment of the final 2016 dividend of US$34.4 million.
LSE:ACA www.acaciamining.com
30
Cash flow generation and capital management Cash flow
(US$000) Three months ended 31 December
Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Cash (used in)/ generated from operating activities (1,503) 60,933 (22,972) 317,976
Cash used in investing activities (13,411) (45,107) (151,711) (185,163)
Cash used in financing activities - - (62,785) (48,032)
(Decrease)/ increase in cash (14,914) 15,826 (237,468) 84,781
Foreign exchange difference on cash 106 (96) 190 (258)
Opening cash balance 95,321 302,061 317,791 233,268
Closing cash balance 80,513 317,791 80,513 317,791
Cash flow from operating activities was an outflow of US$23.0 million for 2017, a decrease of US$340.9 million from 2016 (US$318.0
million inflow). The decrease relates to unfavourable working capital outflows of US$313.0 million compared to unfavourable outflows
of US$58.5 million in 2016 combined with the impact of the inability to export our concentrate on operating cash flow of approximately
US$233.0 million.
The working capital outflow relates to a net increase in total inventories on hand of US$172.2 million driven by the inability to export
concentrate, a gross increase in indirect tax receivables of approximately US$51.7 million, provisional corporate tax paid of US$34.6
million relating to North Mara and a final corporate tax payment relating to North Mara’s 2016 assessed income tax of US$3.3 million.
These provisional and final corporate tax payments have been offset against the indirect tax receivable covered under the
Memorandum of Settlement entered into with the Tanzanian Government in 2011. Other items included in the working capital outflows
included a corporate tax deposit relating to North Mara of US$9.5 million.
Cash flow used in investing activities was US$151.7 million for 2017, a decrease of 18% when compared to 2016 (US$185.2 million),
driven by lower capitalised development at both North Mara and Bulyanhulu and lower sustaining capital expenditure at Bulyanhulu
and North Mara.
LSE:ACA www.acaciamining.com
31
A breakdown of total capital and other investing capital activities for 2017 is provided below:
(US$’000)
Year ended 31 December
(Unaudited) 2017 2016
Sustaining capital
(45,226) (51,291)
Capitalised development (100,609) (138,691) Expansionary capital
(11,573) (3,660)
Total cash capital (157,408) (193,643)
Non-current asset movement1
5,697 8,480
Cash used in investing activities
(151,711) (185,163)
Capital expenditure reconciliation:
Total cash capital
157,408 193,643
Land purchases
1,637 4,759
Movement in capital accruals
(9,669 ) (2,504)
Capital expenditure
149,376 195,898
Land purchases classified as long term prepayments
(1,637) (4,759)
Non-cash rehabilitation asset adjustment
(9,087) 21,955
Total capital expenditure per segment note
138,652 213,094
1 Non-current asset movements relates to the movement in Tanzania government receivables, other long term assets and the sale of a mineral royalty.
Sustaining capital
Sustaining capital expenditure includes investment in fixed equipment and mining infrastructure at Bulyanhulu (US$9.0 million) and at
North Mara (US$13.7 million), investment in mobile equipment and component change-outs at both North Mara and Bulyanhulu (US$8.1
million) In addition; US$1.6 million was spent on land acquisitions primarily around the Nyabirama open pit. During the year, capital
accruals from December 2016 of US$10.0 million were paid.
Capitalised development
Capitalised development includes Bulyanhulu capitalised underground development costs (US$58.8 million), North Mara capitalised
stripping costs (US$45.4 million) and capitalised underground development (US$15.7 million).
Expansionary capital
Expansionary capital expenditure consisted mainly of capitalised expansion drilling at North Mara of US$10.3 million mainly relating to
drilling performed as part of Gokona resource and reserve development (US$6.7 million) as well as initial works on Nyabirama
underground studies (US$3.1 million) and US$1.2 million relating to the Bulyanhulu optimisation study.
Non-cash capital
Non-cash capital was a negative US$9.1 million and consisted mainly of a decrease in capital accruals (US$9.0 million) due to the
cancellation of open capital orders as part of transitioning Bulyanhulu to reduced operations and reclamation asset adjustments (US$9.1
million). The reclamation adjustments were driven by an update in estimate around closure related retrenchment costs, and a reduction in
the US risk free rates which drove a change in discount rates.
Cash flow used in financing activities for 2017 of US$62.8 million, an increase of US$14.8 million from US$48.0 million in 2016. The
outflow relates to payment of the final 2016 dividend of US$34.4 million and the payment of the 4th
and 5th
instalment of the borrowings
related to the Bulyanhulu CIL facility totalling US$28.4 million.
Dividend
Given the negative cash generation through 2017, and in line with our dividend policy, no final dividend has been declared.
LSE:ACA www.acaciamining.com
32
Significant judgements in applying accounting policies and key sources of estimation uncertainty
Many of the amounts included in the condensed consolidated financial information require management to make judgements and/or
estimates. These judgements and estimates are continuously evaluated and are based on management’s experience and best
knowledge of the relevant facts and circumstances, but actual results may differ from the amounts included in the condensed
consolidated financial information included in this release. Information about such judgements and estimation is included in the
accounting policies and/or notes to the consolidated financial statements, and the key areas are summarised below.
Areas of judgement and key sources of estimation uncertainty that have the most significant effect on the amounts recognised in the
condensed consolidated financial statements include:
Estimates of the quantities of proven and probable gold and copper reserves;
Estimates included within the life-of-mine planning such as the timing and viability of processing of long term stockpiles;
The capitalisation of production stripping costs;
The capitalisation of exploration and evaluation expenditures;
Review of goodwill, tangible and intangible assets’ carrying value, the determination of whether a trigger for an impairment review
exist, whether these assets are impaired and the measurement of impairment charges or reversals, and also includes the judgement
of reversal of any previously recorded impairment charges;
The estimated fair values of cash generating units for impairment tests, including estimates of future costs to produce proven and
probable reserves, future commodity prices, foreign exchange rates and discount rates;
The estimated useful lives of tangible and long-lived assets and the measurement of depreciation expense;
Recognition of a provision for environmental rehabilitation and the estimation of the rehabilitation costs and timing of expenditure;
Whether to recognise a liability for loss contingencies and the amount of any such provision;
Whether to recognise a provision for accounts receivable, and in particular the indirect tax receivables from the Tanzanian
Government, a provision for obsolescence on consumables inventory and the impact of discounting the non-current element of the
indirect tax receivable;
Recognition of deferred income tax assets, amounts recorded for uncertain tax positions, the measurement of income tax expense
and indirect taxes;
Determination of the cost incurred in the productive process of ore stockpiles, gold in process, gold doré/bullion and concentrate, as
well as the associated net realisable value and the split between the long term and short term portions;
Determination of fair value of derivative instruments;
Determination of fair value of share options and cash-settled share-based payments;
Judgements around the prospect, timing and final terms of any comprehensive negotiated settlement that the Company might be
able to agree with the Government of Tanzania, including by reference to the key terms of the Framework announcements made in
October 2017 by Barrick and the GoT and including judgements around the timing and quantum of any cash outflows that might be
made in respect of historical tax matters; and
Judgements around the timing of Bulyanhulu’s restart and production ramp up.
LSE:ACA www.acaciamining.com
33
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$000) Three months ended 31 December
Year ended 31 December
(Unaudited) 2017 2016
2017 2016
Gold revenue 188,607 253,957 744,294 1,014,468
Realised gold hedge gains (losses) 2,693 (487) 2,693 (1,818)
Net gold revenue 191,300 253,470 746,987 1,012,651
Gold sold (ounces) 147,636 209,292 592,861 816,743
Net average realised gold price (US$/ounce) 1,296 1,211 1,260 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$'000)
Three months ended 31 December Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Total cost of sales 108,942 196,314 458,447 727,080
Deduct: depreciation and amortisation* (25,260) (43,718) (106,201) (163,796)
Deduct: realised losses on gold hedges 2,693 (487) 2,693 (1,818)
Deduct: Co-product revenue (642) (9,932) (7,221) (39,063)
Total cash cost 85,733 142,177 347,718 522,403
Total ounces sold 147,636 209,292 592,861 816,743
Total cash cost per ounce sold 581 679 587 640 * Depreciation and amortisation includes the depreciation component of the cost of inventory sold
All-in sustaining cost (AISC) is a non-IFRS financial measure. The measure is in accordance with the World Gold Council’s guidance
issued in June 2013. It is calculated by taking cash cost per ounce sold and adding corporate administration costs, share-based
payments, reclamation and remediation costs for operating mines, corporate social responsibility expenses, mine exploration and study
costs, realised gains and/or losses on operating hedges, capitalised stripping and underground development costs and sustaining
capital expenditure. This is then divided by the total ounces sold. A reconciliation between cash cost per ounce sold and AISC for the
key business segments is presented below:
LSE:ACA www.acaciamining.com
34
(Unaudited) Three months ended 31 December 2017
Three months ended 31 December 2016
(US$/oz sold) Bulyanhulu1 North Mara Buzwagi Group* Bulyanhulu North Mara Buzwagi Group*
Cash cost per ounce sold - 587 535 581 784 436 1,035 679
Corporate administration - 29 21 52 17 17 25 30
Share based payments - - 1 1 (21) (14) (20) (47)
Rehabilitation - 12 3 9 8 9 2 7
CSR expenses - 15 8 16 7 19 7 15
Capitalised development - 186 - 93 214 236 - 181
Sustaining capital - 74 15 27 52 147 7 87
Total AISC - 903 583 779 1,061 850 1,056 952
1 Cash cost per ounce sold and AISC per ounce sold for the quarter are non-meaningful due to the impact of negligible sales ounces on the costs relating to reprocessed tailings.
* The group total includes a credit of US$25/oz of unallocated corporate related costs in Q4 2017, and a cost of US$14/oz in Q4 2016.
(Unaudited) Year ended 31 December 2017
Year ended 31 December 2016
(US$/oz sold) Bulyanhulu North Mara Buzwagi Group* Bulyanhulu North Mara Buzwagi Group*
Cash cost per ounce sold 840 498 594 587 722 410 1,031 640
Corporate administration 59 26 35 45 21 21 26 27
Share based payments (6) (2) (2) (14) 2 2 3 37
Rehabilitation 20 11 5 11 7 9 3 7
CSR expenses 10 11 8 14 6 15 10 13
Capitalised development 367 188 - 170 226 201 - 170
Sustaining capital 83 71 27 62 74 75 22 64
Total AISC 1,373 803 667 875 1,058 733 1,095 958
* The group total includes a credit of US$5/oz of unallocated corporate related costs in 2017, and a cost of US$43/oz in 2016.
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.
LSE:ACA www.acaciamining.com
35
A reconciliation between net profit for the period and EBITDA is presented below:
(US$000) Three months ended 31 December
Year ended 31 December
(Unaudited) 2017 2016 2017 2016
Net (loss)/profit for the period (785,975) 48,285 (707,394) 94,944
Plus income tax (credit)/expense (47,835) 11,399 (2,272) 147,113
Plus depreciation and amortisation 25,260 43,718 106,201 163,796
Plus: impairment charges1 850,182 - 850,182 -
Plus finance expense 3,971 2,644 12,407 11,047
Less finance income (140) (365) (1,944) (1,512)
EBITDA 45,463 105,681 257,180 415,388 1 Refer note 7 in the financial statements
*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 (e) 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 December Year ended 31 December (Unaudited) 2017 2016 2017 2016
Net (loss)/earnings (785,975) 48,285 (707,394) 94,944
Adjusted for:
Restructuring cost (a)2 4,874 3,995 23,577 7,689
Discounting of indirect taxes (b) 13,276 (3,211) 13,276 (9,719)
One-off legal settlements (c) - - 5,083 -
Prior year tax positions recognised1 - - - 69,916
Reduced operational cost(d)3 4,000 - 11,411 -
Insurance settlements (e) - (3,455) - (3,455)
Impairment charges/write-offs (f)4 850,182 - 850,182 -
Provision for uncertain tax positions(g)1 172,000 - 172,000 -
Tax impact of the above (212,558) 801 (221,917) 1,646
Adjusted net earnings 45,799 46,415 146,218 161,021
1 Includes a tax provision raised of US$172.0 million for uncertain tax positions, based on an estimate of the impact of a comprehensive settlement reflecting the key terms of
the Framework announcements made by Barrick and the GoT in October 2017. For the 12 months 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. 2 Restructuring costs mainly relate to Bulyanhulu (US$16.9 million) as a result of the transitioning to reduced operations and other sites (US$8.2 million).
3 Reduced operations costs not part of Bulyanhulu’s AISC cost and includes stock obsolescence costs for 2017 (US$6 million) and contractor exit costs (US$4.9 million).
4 Refer note 7 in the financial statements
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.
LSE:ACA www.acaciamining.com
36
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.
LSE:ACA www.acaciamining.com
37
Risk Review
For 2017 our principal risks have continued to fall within four broad categories: strategic risks, financial risks, external risks and
operational risks.
Generally, the makeup of our principal risks has not significantly changed throughout the year. However, there have been changes in
certain risk profiles as a result of the challenges in our operating environment in Tanzania, particularly as a result of ongoing disputes
with the Government of Tanzania, and developments or trends affecting the wider global economy and/or the mining industry. As a
result of the review, at the end of 2017 we viewed our principal risks as relating to the following:
Political, legal and regulatory developments
Single country risk
Attraction and retention of employees
Significant changes to commodity prices
Operational security and theft
Liquidity
Significant fraud and corruption
Reserve and resource estimates
Environmental hazards and rehabilitation
Safety risks relating to mining operations
Further details as regards our Principal Risks and Uncertainties and risk assessments conducted in respect thereof will be provided as
part of the 2017 Annual Report and Accounts.
LSE:ACA www.acaciamining.com
38
Condensed Financial Information
Consolidated income statement
For the year ended
31 December
For the year ended
31 December
(Unaudited) (Audited)
(in thousands of United States dollars) Notes 2017 2016
Revenue 5 751,515 1,053,532
Cost of sales (458,447) (727,080)
Gross profit 293,068 326,452
Corporate administration (26,913) (21,895)
Share-based payments 8,236 (29,929)
Exploration and evaluation costs 6 (24,829) (24,020)
Corporate social responsibility expenses (8,213) (10,665)
Impairment charges 7 (850,182) -
Other (charges)/income 8 (90,370) 11,649
(Loss)/Profit before net finance expense and taxation (699,203) 251,592
Finance income 9 1,944 1,512
Finance expense 9 (12,407) (11,047)
(Loss)/Profit before taxation (709,666) 242,057
Tax credit/(expense) 10 2,272 (147,113)
Net (loss)/profit for the year (707,394) 94,944
(Loss)/Earnings per share: Basic (loss)/earnings per share (cents) 11 (172.5) 23.2
Diluted (loss)/earnings per share (cents) 11 (172.5) 23.1
The notes on pages 43 to 63 are an integral part of this financial information.
LSE:ACA www.acaciamining.com
39
Consolidated statement of comprehensive income
For the year ended
31 December
For the year ended
31 December
(Unaudited) (Audited)
(in thousands of United States dollars) 2017 2016
Net (loss)/profit for the year (707,394) 94,944
Other comprehensive income: Items that may be subsequently reclassified to profit or loss: Changes in fair value of cash flow hedges 108 7
Total comprehensive (expense)/income for the year (707,286) 94,951
The notes on pages 43 to 63 are an integral part of this financial information.
LSE:ACA www.acaciamining.com
40
Consolidated balance sheet
As at
31 December As at
31 December
(Unaudited) (Audited)
(in thousands of United States dollars) Notes 2017 2016
ASSETS
Non-current assets
Goodwill and intangible assets 82,383 216,190
Property, plant and equipment 13 770,574 1,443,176
Deferred tax assets 14 169,513 8,431
Non-current portion of inventory 15 133,550 98,936
Derivative financial instruments 16 907 821
Other assets 17 180,708 63,297
1,337,635 1,830,851
Current assets Inventories 15 291,880 184,313
Trade and other receivables 18 18,085 18,830
Derivative financial instruments 16 2,619 1,343
Other current assets 18 70,155 149,518
Cash and cash equivalents 80,513 317,791
463,252 671,795
Total assets 1,800,887 2,502,646
EQUITY AND LIABILITIES Share capital and share premium 929,199 929,199
Other reserves 191,793 933,696
Total equity 1,120,992 1,862,895
Non-current liabilities Borrowings 19 42,600 71,000
Deferred tax liabilities 14 99,533 148,390
Derivative financial instruments 16 - 30
Provisions 20 127,028 145,722
Other non-current liabilities 5,038 15,699
274,199 380,841
Current liabilities Trade and other payables 20 350,450 222,543
Borrowings 19 28,400 28,400
Derivative financial instruments 16 481 584
Provisions 21 24,650 7,235
Other current liabilities 1,715 148
405,696 258,910
Total liabilities 679,895 639,751
Total equity and liabilities 1,800,887 2,502,646
The notes on pages 43 to 63 are an integral part of this financial information.
LSE:ACA www.acaciamining.com
41
Consolidated statement of changes in equity
(Unaudited) Share
capital Share
premium
Contributed surplus/Other
reserve
Cash flow
hedging reserve
Stock option
reserve Accumulated
losses Total
equity
(in thousands of United States dollars)
Balance at 1 January 2016 (Audited) 62,097 867,102 1,368,713 552 3,876 (514,841) 1,787,499
Profit for the year - - - - - 94,944 94,944
Other comprehensive income - - - 7 - - 7
Share option grants - - - - 77 - 77 Transactions with non-controlling interest holders - - - - - - -
Dividends to equity holders of the Company - - - - - (19,632) (19,632)
Balance at 31 December 2016 (Audited) 62,097 867,102 1,368,713 559 3,953 (439,529) 1,862,895
Loss for the year - - - - - (707,394) (707,394)
Other comprehensive income - - - 108 - - 108
Share option grants - - - - (232) - (232) Transactions with non-controlling interest holders - - - - - - -
Dividends to equity holders of the Company - - - - - (34,385) (34,385)
Balance at 31 December 2017 (Unaudited) 62,097 867,102 1,368,713 667 3,721 (1,181,308) 1,120,992
The notes on pages 43 to 63 are an integral part of this financial information.
LSE:ACA www.acaciamining.com
42
Consolidated statement of cash flows
For the year ended
31 December
For the year ended
31 December
(Unaudited) (Audited)
(in thousands of United States dollars) Notes 2017 2016
Cash flows from operating activities
Net (loss)/profit for the year (707,394) 94,944
Adjustments for: Tax (credit)/expense (2,272) 147,113
Depreciation and amortisation 125,968 156,301
Finance items 10,463 9,535
Impairment charges 850,182 -
Loss/(Profit) on disposal of property, plant and equipment 123 (289)
Sale of mineral royalty (1,753) -
Cash settlement of share options (259) -
Working capital movements 12 (313,091) (58,497)
Other non-cash items 12 22,160 (23,850)
Cash (used in)/generated from operations before interest and tax (15,873) 325,257
Finance income 1,944 1,512
Finance expenses (9,043) (8,793)
Cash (used in)/generated by operating activities (22,972) 317,976
Cash flows from investing activities Purchase of property, plant and equipment (157,408) (193,643)
Movement in other assets 6,856 6,952
Acquired mineral interest - (5,000)
Proceeds from sale of mineral royalty 1,753 -
Other investing activities 12 (2,912) 6,528
Cash used in investing activities (151,711) (185,163)
Cash flows from financing activities Loans paid (28,400) (28,400)
Dividends paid (34,385) (19,632)
Net cash used in financing activities (62,785) (48,032)
Net (decrease)/increase in cash and cash equivalents (237,468) 84,781
Net foreign exchange difference 190 (258)
Cash and cash equivalents at 1 January 317,791 233,268
Cash and cash equivalents at year end 80,513 317,791
The notes on pages 43 to 63 are an integral part of this financial information.
LSE:ACA www.acaciamining.com
43
Notes to the condensed financial information 1. General Information
Acacia Mining plc, formerly African Barrick Gold plc (the “Company”, "Acacia” or collectively with its subsidiaries the “Group”) was incorporated on 12 January 2010 and re-registered as a public limited company on 12 March 2010 under the Companies Act 2006. It is registered in England and Wales with registered number 7123187.
On 24 March 2010 the Company’s shares were admitted to the Official List of the United Kingdom Listing Authority (“UKLA”) and to trading on the Main Market of the London Stock Exchange, hereafter referred to as the Initial Public Offering (“IPO”). The address of its registered office is No.1 Cavendish Place, London, W1G 0QF.
Barrick Gold Corporation (“Barrick”) currently owns approximately 63.9% of the shares of the Company and is the ultimate parent and controlling party of the Group. The financial statements of Barrick can be obtained from www.barrick.com.
The condensed consolidated financial information for the year ended 31 December 2017 was approved for issue by the Board of
Directors of the Company on 11 February 2017. The condensed consolidated financial information does not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006. The condensed consolidated financial information is unaudited.
The Group’s primary business is the mining, processing and sale of gold. The Group has three operating mines located in Tanzania. The Group also has a portfolio of exploration projects located across Africa. 2. Basis of Preparation of the condensed financial information
The financial information set out above does not constitute the Group’s statutory accounts for the year ended 31 December 2017, but is
derived from the Group’s full financial accounts, which are in the process of being audited. The Group’s full financial accounts will be
prepared under International Financial Reporting Standards as adopted by the European Union.
The condensed consolidated financial information has been prepared under the historical cost convention basis, as modified by the
revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit and loss. The financial
statements are presented in US dollars (US$) and all monetary results are rounded to the nearest thousand dollars (US) except when
otherwise indicated.
Where a change in the presentational format between the prior year and current year condensed consolidated financial information has
been made during the period, comparative figures have been restated accordingly. No presentational changes were made in the
current year.
The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The condensed financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the group’s annual financial statements as at 31 December 2017. There have been no changes in the risk management department or in any risk management policies since the year end. The impact of the seasonality on operations is not considered as significant on the condensed consolidated financial information.
In assessing the Acacia Group’s going concern status the Directors have taken into account the impact of the concentrate export ban
on ongoing operations as well as the following factors and assumptions: the current cash position; the latest mine plans, the short term
gold price, and Acacia Group’s capital expenditure and financing plans. In addition, the Directors have considered a range of scenarios
around the various potential outcomes for the resolution of the current operating challenges in Tanzania in the circumstances, including
the cash flow impact of an extended concentrate export ban; and the potential impacts of the timing and final terms of any
comprehensive settlement which might be approved by the Company which reflect key terms of the Framework announcements made
by Barrick and the GoT in October 2017, including the lifting of the concentrate export ban and staged payments of US$300 million
relating to historical tax matters. In addition the Directors have assumed that the Group will not be required to settle its current
outstanding borrowing obligations and will repay these in accordance with the current terms of the relevant agreements. After making
appropriate enquiries and considering the uncertainties described above, the Directors consider that it is appropriate to adopt the going
concern basis in preparing the condensed consolidated financial information however have concluded that the combination of the
above circumstances represents a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going
concern. The condensed consolidated financial information does not include any adjustments that would result if the Group was unable
to continue as a going concern should the assumptions referred to above prove not to be correct.
The auditors have indicated that they are likely to issue an emphasis of matter within their audit opinion included within the Annual Report, drawing attention to the material uncertainties related to the impact of the concentrate export ban and ongoing discussions between Barrick and the GoT on the group’s company’s assets, liabilities and cash flows, and to include a separate section within their audit opinion under the heading “Material uncertainty related to going concern” detailing the matters outlined above.
LSE:ACA www.acaciamining.com
44
3. Accounting Policies
Accounting policies have remained consistent with the prior year except for the adoption of new standards and amendments to
standards.
a) New and amended standards adopted by the Group
The following amendments to standards are applicable and were adopted by the Group for the first time for the financial year beginning
1 January 2017:
Amendments to IAS 12, ‘Recognition of Deferred Tax Assets for Unrealised Losses’. Amendments made to IAS 12 will aim to clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. Effective 1 January 2017. The amendment did not have a significant impact on the Group financial statements.
Amendments to IAS 7, ‘Disclosure Initiative’. Going forward, entities will be required to explain changes in their liabilities arising from financing activities. This includes changes arising from cash flows (e.g. drawdowns and repayments of borrowings) and non-cash changes such as acquisitions, disposals, accretion of interest and unrealised exchange differences. Changes in financial assets must be included in this disclosure if the cash flows were, or will be, included in cash flows from financing activities. Effective 1 January 2017. The amendment did not have a significant impact on the Group financial statements.
b) New and amended standards, and interpretations not yet adopted
The following standards and amendments to existing standards have been published and are mandatory for the Group’s accounting
periods beginning on or after 1 January 2017:
Amendment to IFRS 9 -'Financial instruments'. IFRS 9 replaces the multiple classification and measurement models in IAS 39 Financial instruments: Recognition and measurement with a single model that has initially only two classification categories: amortised cost and fair value. The amendment is however not expected to have a significant impact on the Group.
IFRS 15 – Revenue from contracts with customers. This standard is a single, comprehensive revenue recognition model for all contracts with customers to achieve greater consistency in the recognition and presentation of revenue. Revenue is recognised based on the satisfaction of performance obligations, which occurs when control of good or service transfers to a customer. Effective 1 January 2018. The standard is not expected to have a significant impact on the Group.
IFRS 16 – ‘Leases’. IFRS 16 supersedes IAS 17, ‘Leases’, IFRIC 4, ‘Determining whether an Arrangement contains a Lease’, SIC 15, ‘Operating Leases – Incentives’ and SIC 27, ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’. IFRS 16 will affect primarily the accounting by lessees and will result in the recognition of almost all leases on balance sheet. The standard removes the current distinction between operating and financing leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for virtually all lease contracts. Effective 1 January 2019. Management is currently evaluating the impact of new standard in order to put all frameworks and systems in place. Based on initial investigation, the standard is not expected to have a significant impact on the Group, due to majority of our existing contracts either relate to service agreements or the performance obligations based on variable terms and thus not resulting in a right of use asset.
Amendments to IFRS2, ‘Classification and Measurement of Share-based Payment Transactions’. The amendments made to AASB 2 in July 2016 clarify the measurement basis for cash-settled share-based payments and the accounting for modifications that change an award from cash-settled to equity-settled. Effective 1 January 2018. The standard is not expected to have a significant impact on the Group.
Amendments to IFRS 10, 'Consolidated financial statements' and IAS 28,'Investments in associates and joint ventures' on sale or contribution of assets. The IASB has issued this amendment to eliminate the inconsistency between IFRS 10 and IAS 28. The IASB decided to defer the application date of this amendment, until such time this is not applicable. The amendment is however not expected to have a significant impact on the Group. IFRS 9 – Financial Instruments (2009 &2010). The IASB has updated IFRS 9, ‘Financial instruments’ to include guidance on financial liabilities and de-recognition of financial instruments. The accounting and presentation for financial liabilities and for derecognising financial instruments has been relocated from IAS 39, ‘Financial instruments: Recognition and measurement’, without change, except for financial liabilities that are designated at fair value through profit or loss. . Effective 1 January 2018. The standard is not expected to have a significant impact on the Group.
LSE:ACA www.acaciamining.com
45
4. Segment Reporting
The Group has only one primary product produced in a single geographic location, being gold produced in Tanzania. In addition the
Group produces copper and silver as a co-product. Reportable operating segments are based on the internal reports provided to the
Chief Operating Decision Maker (“CODM”) to evaluate segment performance, decide how to allocate resources and make other
operating decisions. After applying the aggregation criteria and quantitative thresholds contained in IFRS 8, the Group’s reportable
operating segments were determined to be: North Mara gold mine; Bulyanhulu gold mine; Buzwagi gold mine; a separate Corporate
and Exploration segment, which primarily consist of costs related to other charges and corporate social responsibility expenses.
Segment results and carrying values include items directly attributable to the segment as well as those that can be allocated on a reasonable basis. Segment carrying values are disclosed and calculated as shareholders equity after adding back debt and intercompany liabilities, and subtracting cash and intercompany assets. Capital expenditures comprise of additions to property, plant and equipment. The Group has also included segment cash costs and all-in sustaining cost per ounce sold.
Segment information for the reportable operating segments of the Group for the periods ended 31 December 2017 and 31 December 2016 is set out below.
LSE:ACA www.acaciamining.com
46
For the year ended 31 December 2017
(Unaudited) (in thousands of United States dollars) North Mara Bulyanhulu Buzwagi Other Total
Gold revenue 406,917 134,110 203,267 - 744,294
Co-product revenue 1,296 2,937 2,988 - 7,221
Total segment revenue 408,213 137,047 206,255 - 751,515
Segment cash operating cost1 (163,001) (93,521) (98,417) - (354,939)
Realised gains on gold hedges 1,294 - 1,399 - 2,693
Corporate administration (8,313) (6,314) (5,694) (6,592) (26,913)
Share-based payments 511 593 349 6,783 8,236
Exploration and evaluation costs - (571) - (24,258) (24,829)
Other charges and corporate social responsibility expenses
(13,243) (52,916) (13,605) (18,819) (98,583)
EBITDA2 225,461 (15,682) 90,287 (42,886) 257,180
Impairment charges - (837,921) - (12,261) (850,182)
Depreciation and amortisation4 (54,826) (46,531) (4,288) (556) (106,201)
EBIT2 170,635 (900,134) 85,999 (55,703) (699,203)
Finance income 1,944
Finance expense (12,407)
Loss before taxation (709,666)
Tax credit/(expense) 2,272
Net loss for the year (707,394)
Capital expenditure:
Sustaining 20,927 9,033 4,338 1,259 35,557
Expansionary 10,270 1,190 - 113 11,573
Capitalised development 61,066 39,543 - - 100,609
92,263 49,766 4,338 1,372 147,739
Non-cash capital expenditure adjustments
Reclamation asset addition (2,951) (4,158) (1,978) - (9,087)
Total capital expenditure 89,312 45,608 2,360 1,372 138,652
Segmental cash operating cost 163,001 93,521 98,417 354,939
Deduct: co-product revenue (1,296) (2,937) (2,988) (7,221)
Total cash costs 161,705 90,584 95,429 347,718
Sold ounces 324,455 107,855 160,552 592,861
Cash cost per ounce sold2 498 840 594 587
Corporate administration charges 26 59 35 45
Share based payments (2) (6) (2) (14)
Rehabilitation - accretion and depreciation 11 20 5 11
Corporate social responsibility expenses 11 10 8 14
Capitalised stripping/ UG development 188 367 - 170
Sustaining capital expenditure 71 83 27 62
All-in sustaining cost per ounce sold2 803 1,373 667 875
Segment carrying value3 249,170 600,359 194,385 82,864 1,126,778
LSE:ACA www.acaciamining.com
47
For the year ended 31 December 2016
(Audited) (in thousands of United States dollars) North Mara Bulyanhulu Buzwagi Other Total
Gold revenue 468,340 345,481 200,648 - 1,014,469
Co-product revenue 953 15,447 22,663 - 39,063
Total segment revenue 469,293 360,928 223,311 - 1,053,532
Segment cash operating cost1 (155,344) (217,226) (188,896) - (561,466)
Realised losses on gold hedges - - (1,818) - (1,818)
Corporate administration (7,954) (5,975) (4,176) (3,790) (21,895)
Share-based payments (623) (518) (470) (28,318) (29,929)
Exploration and evaluation costs (297) (3,532) - (20,191) (24,020)
Other charges and corporate social responsibility expenses (2,295) (3,442) (723) 7,444 984
EBITDA2 302,780 130,235 27,228 (44,855) 415,388
Impairment charges - - - - -
Depreciation and amortisation4 (67,472) (82,022) (12,668) (1,634) (163,796)
EBIT2 235,308 48,213 14,560 (46,489) 251,592
Finance income 1,512
Finance expense (11,047)
Profit before taxation 242,057
Tax expense (147,113)
Net profit for the year 94,944
Capital expenditure: Sustaining 23,558 20,231 3,582 1,416 48,787
Expansionary 2,399 1,262 - - 3,661
Capitalised development 75,609 63,082 - - 138,691
101,566 84,575 3,582 1,416 191,139
Non-cash capital expenditure adjustments
Reclamation asset addition 6,703 10,728 4,524 - 21,955
Total capital expenditure 108,269 95,303 8,106 1,416 213,094
Segmental cash operating cost 155,344 217,226 188,896 561,466
Deduct: co-product revenue (953) (15,447) (22,663) (39,063)
Total cash costs 154,391 201,779 166,233 522,403
Sold ounces 376,255 279,286 161,202 816,743
Cash cost per ounce sold2 410 722 1,031 640
Corporate administration charges 21 21 26 27
Share based payments 2 2 3 37
Rehabilitation - accretion and depreciation 9 7 3 7
Corporate social responsibility expenses 15 6 10 13
Capitalised stripping/ UG development 201 226 - 170
Sustaining capital expenditure 75 74 22 64
All-in sustaining cost per ounce sold2 733 1,058 1,095 958
Segment carrying value3 246,175 1,231,793 97,243 82,710 1,657,921
1 The CODM reviews cash operating costs for the three operating mine sites separately from corporate administration costs and exploration costs. Consequently, the Group has reported these costs in this
manner.
2 These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ‘Non IFRS measures’ on page 33 for definitions.
3 Segment carrying values are calculated as shareholders equity after adding back debt and intercompany liabilities, and subtracting cash and intercompany assets and include outside shareholders’
interests.
4 Depreciation and amortisation include the depreciation component of the cost of inventory sold.
LSE:ACA www.acaciamining.com
48
5. Revenue
For the year ended 31 December
(Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
Gold doré sales 720,755 739,317
Gold concentrate sales¹ 23,539 275,152
Copper concentrate sales¹ 4,001 32,658
Silver sales 3,220 6,405
Total 751,515 1,053,532
1
Concentrate sales includes negative provisional price adjustments to the accounts receivable balance due to changes in market gold, silver and copper prices prior to final settlement as
follows: US$3.6 million for the year ended 31 December 2017 (US$7.0 million for the year ended 31 December 2016).
(in thousands of United States dollars)
For the year ended 31 December
(Unaudited)
For the year ended
31 December (Audited)
Revenue by Location of Customer2 2017 2016
Europe
Switzerland 140,691 488,383
Germany 11,615 58,747
Asia India 582,943 253,881
China 437 176,143
Japan 15,829 76,378
Total revenue 751,515 1,053,532
2
Revenue by location of customer is determined based on the country to which the gold is delivered.
Included in revenues for the year ended 31 December 2017 are sales to six major customers. Revenues of approximately US$739 million (2016: US$913 million) arose from sales to four of the Group’s largest customers.
6. Exploration and Evaluation costs
The following represents a summary of exploration and evaluation expenditures incurred at each mine site and significant exploration targets (if applicable).
For the year ended 31 December
(Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
Expensed during the year:
North Mara - 297
Bulyanhulu 571 3,532
Kenya 12,208 10,582
West Africa 11,119 7,544
Other1 931 2,065
Total expensed 24,829 24,020
Capitalised during the year: North Mara 10,270 2,399
Total 35,099 26,419
1 - Included in “other” are the exploration activities conducted through ABG Exploration Limited. All primary greenfield exploration and evaluation activities are conducted in this company.
LSE:ACA www.acaciamining.com
49
7. Impairment
In accordance with IAS 36 “Impairment of assets” and IAS 38 “Intangible Assets” a review for impairment of goodwill is undertaken
annually, or at any time an indicator of impairment is considered to exist, and in accordance with IAS 16 “Property, plant and
equipment” a review for impairment of long-lived assets is undertaken at any time an indicator of impairment is considered to exist.
Acacia has identified triggers for impairment testing of the carrying value of its assets, including but not limited to the challenges
experienced in the operating environment in Tanzania, the announcement of new legislation by the GoT in respect of the natural
resources sector and the resulting decision to reduce operations at Bulyanhulu..
As a result, the Group has undertaken a carrying value assessment of its affected cash generating units (“CGUs”) and long life
intangible assets. The assessment compared the recoverable amount of CGU to the carrying value of the CGUs including goodwill. The
recoverable amount of an asset is assessed by reference to the higher of value in use (“VIU”), being the net present value (“NPV”) of
future cash flows expected to be generated by the asset, and fair value less costs to dispose (“FVLCD”). The FVLCD of a CGU is
based on an estimate of the amount that the Group may obtain in a sale transaction on an arm’s length basis. There is no active market
for the Group’s CGUs. Consequently, FVLCD is derived using discounted cash flow techniques (NPV of expected future cash flows of a
CGU), which incorporate market participant assumptions. Cost to dispose is based on management’s best estimates of future selling
costs at the time of calculating FVLCD. Costs attributable to the disposal of a CGU are not considered significant.
For the purpose of carrying value assessments in accordance with applicable accounting standards, Management has based its
calculation of future cash flows of the affected CGUs by reference to key terms of the Framework announcements by Barrick and by
the GoT in October 2017. Based on Barrick’s announcements and its discussions and exchanges with Acacia, it is Barrick’s belief that
it will be able to agree with the GoT a detailed proposal for a comprehensive settlement of the situation, and that this will be in a form
that Barrick could recommend to Acacia for review and approval. Key assumptions applied in these calculations include a 50%
economic share of future economic benefits for the GoT in the form of taxes, royalties and a 16% free carry interest in the CGUs, as
well as a US$300 million payment in relation to historical tax claims paid in instalments as concentrate sales recommence. In addition
the Framework announcements provided for Acacia to contribute certain monies to fund specific projects in Tanzania. For the
purposes of the carrying value assessments, Acacia has assumed that concentrate sales will resume from 1 July 2018 and Bulyanhulu
will return to full operation towards the end of 2019, VAT refunds will recommence and historic carried forward tax losses will continue
to be available to offset against future taxable profits. Barrick has previously announced that it is targeting H1 2018 for agreement of
the detailed terms and documentation for a comprehensive settlement reflecting the key terms of the Framework announcements.
Acacia continues to provide support to Barrick in its discussions with the GoT, Acacia has not yet received for review and approval a
detailed proposal that has been agreed between Barrick and the GoT, and no conclusions can be made by Acacia as to whether any
particular terms of settlement would be approved by Acacia. In the meantime, Acacia continues to reserve its rights included under our
mine development agreements, the disputes between Acacia and the GoT have not yet been resolved, and PML and BGML remain in
international arbitration with the GoT. Acacia continues to prefer a negotiated resolution, but believes that there remain a range of
potential outcomes to the current situation.
Acacia considers that, in conducting the review of carrying values in accordance with applicable accounting standards as at 31
December 2017, the discount rate should be increased to (a) reflect the uncertainty around the final terms of any comprehensive
settlement that might be agreed or whether settlement will be reached at all, and (b) to best reflect the potential reduction in value as a
result of the proposed 16% free carry interest for the GoT which cannot otherwise be included in calculations of value at a CGU level
conducted on a 100% basis. Therefore, for the purposes of the carrying value review of the affected CGUs, we have used a discount
rate of 11% compared to Acacia’s updated calculated weighted average cost of capital of 6.5% (2016:5%).
LSE:ACA www.acaciamining.com
50
The key economic assumptions used in the reviews during 2017 and 2016 were:
For the year ended 31 December
For the year ended 31 December
2017 2016
Gold price per ounce US$1,200 US$1,200
Copper price per pound US$2.75 US$2.25
British Pound (US$:GBP) 0.76 0.74
Tanzanian Shilling (US$:TZS) 2,250 2,150
Long-term oil price per barrel US$60 US$60
WACC 6.5% 5%
Discount rate used in carrying value review 11% 5%
NPV multiples 1 1
The carrying value assessment demonstrates a reduction in value at all three CGUs, however, based on these assumptions Buzwagi and
North Mara have headroom above their current carrying values. At Bulyanhulu, the impact of the changes was greater, due to the long life
of the mine and the delay to a return to positive cash generation due to the move to reduced operations. Acacia has recorded a net
impairment of US$632.0 million for Bulyanhulu, which includes a pre-tax write-down of US$122 million for goodwill. In addition we have
recorded an impairment charge of US$12.3 million for the Nyanzaga Project to reflect the impact of the new mining laws on the carrying
value of the project, which now stands at US$34 million.
The adjusted carrying value for the Group is now approximately US$1.1 billion, made up of US$0.6 billion for Bulyanhulu, US$0.2 billion for
North Mara, US$0.2 billion for Buzwagi and US$0.1 billion for exploration and other.
The impairment charges recognised in the income statement for the year ended 31 December comprise the following:
For the year ended 31 December
For the year ended 31 December
(in thousands of United States dollars) 2017 2016
Bulyanhulu 837,921 -
Nyanzaga exploration property1 12,261 -
Gross impairment charge 850,182 -
Comprising: Impairment of goodwill 121,546
Impairment of property, plant and equipment 686,375 -
Impairment of supplies inventory 30,000 -
Impairment of intangible assets 12,261 -
Gross impairment charge, before tax 850,182 -
Deferred income tax (205,912) -
Total impairment charge 644,270 -
1 The Nyanzaga exploration property is located in Tanzania. Acquired mineral interests /exploration and evaluation assets are classified as intangible assets and have indefinite useful lives.
For purposes of testing for impairment of long-lived assets, we have assessed whether a reasonably possible change in any of the key
assumptions used to estimate the recoverable value for CGUs would result in an impairment charge.
Management’s view is that the recoverable values are most sensitive to changes in the assumptions around gold prices, discount rates
and the timing of the resolution of the export ban. As a result, sensitivity calculations were performed for these for each of the CGUs.
The sensitivity analysis is based on a decrease in the long term gold price of US$100 per ounce, and an increase in the discount rate of
1%, and a delay of resolution by 12 months.
Under these scenarios, a reasonably possible decrease in the gold price assumption of US$100 per ounce would result in an additional
impairment charge, net of tax, relating to Bulyanhulu of approximately US$172 million, while a similar increase in gold price would result
LSE:ACA www.acaciamining.com
51
in a reduction in the impairment charge of similar value. In addition, given limited headroom, a similar decrease would resul t in an
impairment charge of US$43m at Buzwagi, whilst at North Mara headroom would be maintained.
Under the assumptions as set out above, a further delay in the resolution of the export ban will result in an additional impairment charge
of US$56 million for Bulyanhulu, while headroom is maintained for North Mara and Buzwagi.
A reasonably possible increase in discount rate of 1% would result in an additional impairment relating to Bulyanhulu of US$63 million,
with a reasonably possible decrease in discount rate of 1% resulting in a reduction in impairment charges of similar value. Buzwagi and
North Mara will not be affected.
A reasonably possible adverse change in any of the assumptions set out above will result in an additional impairment relating to
Nyanzaga.
Should a negotiated resolution of the current situation not eventuate, the recoverable values of the identified CGUs may be further
impacted, and these will be reviewed at such time.
8. Other Charges/(Income)
For the year ended
31 December
For the year ended
31 December
(Unaudited) (Audited)
(in thousands of United States dollars) 2017 2016
Other expenses
Restructuring costs 25,077 7,689
Discounting of indirect tax receivables 13,276 -
Bulyanhulu reduced operations costs1 24,804 -
Foreign exchange losses 2,710 -
Legal costs 14,421 2,641
One off legal settlement 5,083 -
Project development costs 1,485 1,123
Inventory write-downs 1,500 -
Other 5,573 4,583
Total 93,929 16,036
Other income Bad debts recovered - (54)
Discounting of indirect tax receivables - (9,719)
Profit on disposal of property, plant and equipment - (289)
Unrealised non-hedge derivative gains (200) (13,031)
Foreign exchange gains - (1,137)
Insurance proceeds - (3,455)
Other (3,359) -
Total (3,559) (27,685)
Total other charges/(income) 90,370 (11,649)
1 Includes US$13.9 million of non-sustaining operating costs allocated, US$4.9m of contract exit costs and US$6 million of inventory written down as a result of moving to reduced operational
state.
LSE:ACA www.acaciamining.com
52
9. Finance Income and Expenses
a) Finance income
For the year ended
31 December (Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
Interest on time deposits 1,841 1,236
Other 103 276
Total 1,944 1,512
b) Finance expense
For the year ended
31 December (Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
Unwinding of discount1 3,364 2,254
Revolving credit facility charges2 2,341 2,279
Interest on CIL facility 2,911 3,956
Premium on gold put options 2,113 -
Interest on finance leases 204 -
Bank charges 583 701
Other 891 1,857
Total 12,407 11,047 1 The unwinding of discount is calculated on the environmental rehabilitation provision.
2 Included in credit facility charges are the amortisation of the fees related to the revolving credit facility as well as the monthly interest and facility fees.
10. Tax (Credit)/Expense
For the year ended
31 December (Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
Current tax: Current tax on profits for the year 35,667 54,508
Adjustments in respect of prior years1 172,000 36,697
Total current tax 207,667 91,205
Deferred tax: Origination and reversal of temporary differences
2 (209,939) 55,908
Total deferred tax (209,939) 55,908
Income tax (credit)/expense (2,272) 147,113
1 Included in 2017 is a provision for uncertain tax positions of US$68.5 million relating to North Mara and US$103.5 million relating to Bulyanhulu, for uncertain tax positions, based on an estimate of the
impact of a comprehensive settlement reflecting the key terms of the Framework announcements made by Barrick and the GoT in October 2017. Included in 2016 is a provision for uncertain tax positions
of US$30.4 million relating to North Mara, and US$4.4 million relating to Tulawaka, following an adverse tax ruling as reported in Q1 2016.
2 Included in 2016 is a provision for uncertain tax positions of US$35.0 million relating to Bulyanhulu following an adverse tax ruling, as reported in Q1 2016.
LSE:ACA www.acaciamining.com
53
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated entities as follows:
For the year ended
31 December (Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
(Loss)/ profit before tax (709,666) 242,057
Tax calculated at domestic tax rates applicable to profits in the respective countries (209,074) 73,373
Tax effects of: Difference in tax rates in different jurisdictions (3,826) (756)
Expenses not deductible for tax purposes3
49,142 247 Tax losses for which no deferred income tax asset was recognised
9,611 76,592
Utilisation of previously unrecognised tax losses (25,594) -
Increase in provision for uncertain tax positions4
172,000 -
Other permanent differences 5,469 (2,343)
Tax (credit)/charge (2,272) 147,113
3 Relates mainly to impairment charges relating to goodwill, intangibles and supplies inventory not deductible for tax purposes. Refer note 7 for full details
4 Included in 2017 is a provision for uncertain tax positions of US$68.5 million relating to North Mara and US$103.5 million relating to Bulyanhulu, based on an estimate of the impact of a comprehensive
settlement reflecting the key terms of the Framework announcements made by Barrick and the GoT in October 2017.
In addition to the net impairment as set out in note 7, to meet applicable accounting standards, Acacia has also raised an additional tax provision of US$172 million relating to the estimated uncertain tax positions for its operating companies. Management has based its calculation on an estimate of the impact of a comprehensive settlement reflecting the key terms of the Framework announcements made by Barrick and the GoT in October 2017, including in respect of historical tax claims. This brings total provisions for Acacia’s uncertain tax positions to US$300 million. Acacia continues to reserve and protect all its legal rights, as noted above and including through the arbitrations commenced by BGML and PML, and no liability has been incurred by Acacia as a result of the Framework announcements. The additional provision is required, however, to meet applicable accounting standards requiring assessment of current obligations for accounting purposes based on an assessment of relevant cash outflows from the relevant operating companies in respect of uncertain tax positions. Tax periods remain open to review by the Tanzanian Revenue Authority (TRA) in respect of income taxes for five years following the date of the filing of the corporate tax return, during which time the authorities have the right to raise additional tax assessments including penalties and interest. Under certain circumstances the reviews may cover longer periods. Because a number of tax periods remain open to review by tax authorities, there is a risk that transactions that have not been challenged in the past by the authorities may be challenged by them in the future, and this may result in the raising of additional tax assessments plus penalties and interest. 11. (Loss)/Earnings Per Share (EPS)
Basic EPS is calculated by dividing the net (loss)/profit for the year attributable to owners of the Company by the weighted average number of Ordinary Shares in issue during the year.
Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary Shares outstanding to assume conversion of all dilutive potential Ordinary Shares. The Company has dilutive potential Ordinary Shares in the form of stock options. The weighted average number of shares is adjusted for the number of shares granted assuming the exercise of stock options.
LSE:ACA www.acaciamining.com
54
At 31 December 2017 and 31 December 2016, earnings per share have been calculated as follows:
For the year ended
31 December (Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
(Loss)/Earnings
Net (loss)/profit from continuing operations attributable to owners of the parent (707,394) 94,944
Weighted average number of Ordinary Shares in issue 410,085,499 410,085,499
Adjusted for dilutive effect of stock options - 355,514
Weighted average number of Ordinary Shares for diluted earnings per share 410,085,499 410,441,013
(Loss)/Earnings per share Basic (loss)/earnings per share (cents) (172.5) 23.2
Dilutive (loss)/earnings per share (cents) (172.5) 23.1
12. Cash flow – other items
a) Operating cash flows - other items
Movements relating to working capital items
For the year ended 31 December
(Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
Indirect and corporate taxes1
(89,560) (59,100)
Increase in indirect tax receivable (51,703) (18,224)
Prepaid corporate tax - (20,000)
Income tax paid – Final (3,257) -
Income tax paid – Provisional (34,600) (20,876)
Other current assets2 (10,774) 695
Trade receivables 745 (4,472)
Inventories3 (172,180) (8,312)
Other liabilities4 (7,301) 33,582
Share based payments4
(1,780) (35,966)
Trade and other payables5 (31,170) 15,931
Other working capital items6 (1,071) (855)
Total (313,091) (58,497)
1 During the year, we have made US$34.6 million (2016: US$20.0 million) corporate tax provisional payments as well as US$ 3.3 million final corporate tax payments relating to North Mara’s 2016 tax
assessment. This has been funded through an offset against current indirect taxes that was due for refund.
2 Other current assets include North Mara corporate tax deposits paid of US$9.5 million.
3 The inventory adjustment includes the movement in current as well as the non-current portion of inventory.
4 The other liabilities adjustment mainly relate to the revaluation of future shared based payments. During the year, share based payments of US$1.8 million (2016: US$36.0 million) was made.
5 The trade and other payables adjustment exclude statutory liabilities in the form of income tax payable.
6 Other working capital items include exchange losses associated with working capital.
LSE:ACA www.acaciamining.com
55
Other non-cash items
For the year ended
31 December (Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
Adjustments for non-cash income statement items:
Foreign exchange losses/(gains) 2,900 (1,463)
Discounting of indirect tax receivables 13,276 (9,719)
Provisions added 7,550 -
Provisions settled - (8)
Movement in derivatives (1,495) (13,031)
Stock option expense 27 77
Other non-cash items 92 36
Exchange loss on revaluation of cash balances (190) 258
Total 22,160 (23,850)
b) Investing cash flows - other items
For the year ended 31 December
(Unaudited)
For the year ended
31 December (Audited)
(in thousands of United States dollars) 2017 2016
Proceeds on sale of property, plant and equipment - 6,713
Other long-term receivables 194 (10)
Rehabilitation expenditure (3,106) (175)
Total (2,912) 6,528
LSE:ACA www.acaciamining.com
56
13. Property, Plant and Equipment
For the year ended 31 December 2017 (Unaudited)
(in thousands of United States dollars)
Plant and equipment
Mineral properties and mine development
costs Assets under construction¹ Total
At 1 January 2017, net of accumulated depreciation 553,993 842,019 47,164 1,443,176
Additions - - 147,739 147,739
Non-cash reclamation asset adjustment (9,087) - - (9,087)
Foreign currency translation adjustments 1,212 - - 1,212
Disposals/write-downs (123) - - (123)
Impairment2 (274,608) (411,767) - (686,375)
Depreciation (71,984) (53,984) - (125,968)
Transfers between categories 46,165 109,791 (155,956) -
At 31 December 2017 245,568 486,059 38,947 770,574
At 1 January 2017
Cost 1,914,522 1,777,277 47,164 3,738,963
Accumulated depreciation and impairment (1,360,529) (935,258) - (2,295,787)
Net carrying amount 553,993 842,019 47,164 1,443,176
At 31 December 2017
Cost 1,943,643 1,887,068 38,947 3,869,658
Accumulated depreciation and impairment (1,698,075) (1,401,009) - (3,099,084)
Net carrying amount 245,568 486,059 38,947 770,574
1 Assets under construction represents (a) sustaining capital expenditures incurred constructing property, plant and equipment related to operating mines and advance deposits made towards the
purchase of property, plant and equipment; and (b) expansionary expenditure allocated to a project on a business combination or asset acquisition, and the subsequent costs incurred to develop the mine.
Once these assets are ready for their intended use, the balance is transferred to plant and equipment and/or mineral properties and mine development costs.
2 Impairment in 2017 relates to property plant and equipment at Bulyanhulu. Refer to note 7 for further detail.
LSE:ACA www.acaciamining.com
57
For the year ended 31 December 2016 (Audited)
(in thousands of United States dollars)
Plant and equipment
Mineral properties and mine development
costs Assets under construction¹ Total
At 1 January 2016, net of accumulated depreciation 572,877 761,592 56,244 1,390,713
Additions - - 191,139 191,139
Non-cash reclamation asset adjustment 21,955 - - 21,955
Foreign currency translation adjustments 2,203 - - 2,203
Disposals/write-downs (6,533) - - (6,533)
Depreciation (95,864) (60,437) - (156,301)
Transfers between categories 59,355 140,864 (200,219) -
At 31 December 2016 553,993 842,019 47,164 1,443,176
At 1 January 2016 Cost 1,845,234 1,636,413 56,244 3,537,891
Accumulated depreciation and impairment (1,272,357) (874,821) - (2,147,178)
Net carrying amount 572,877 761,592 56,244 1,390,713
At 31 December 2016 Cost 1,914,522 1,777,277 47,164 3,738,963
Accumulated depreciation and impairment (1,360,529) (935,258) - (2,295,787)
Net carrying amount 553,993 842,019 47,164 1,443,176
1 Assets under construction represents (a) sustaining capital expenditures incurred constructing property, plant and equipment related to operating mines and advance deposits made towards the
purchase of property, plant and equipment; and (b) expansionary expenditure allocated to a project on a business combination or asset acquisition, and the subsequent costs incurred to develop the mine.
Once these assets are ready for their intended use, the balance is transferred to plant and equipment and/or mineral properties and mine development costs.
Leases
Property, plant and equipment include assets relating to the design and construction costs of power transmission lines and related infrastructure. At completion, ownership was transferred to TANESCO in exchange for amortised repayment in the form of reduced electricity supply charges. No future lease payment obligations are payable under these finance leases. Property, plant and equipment also include five drill rigs purchased under short-term finance leases. The following amounts were included in property, plant and equipment where the Group was a lessee under a finance lease:
As at 31 December
As at 31 December
(in thousands of United States dollars)
2017 (Unaudited)
2016 (Audited)
Cost - capitalised finance leases 51,618 51,617
Accumulated depreciation and impairment (42,948) (40,925)
Net carrying amount 8,670 10,692
LSE:ACA www.acaciamining.com
58
14. Deferred Tax Assets and Liabilities
Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items:
As at
31 December As at
31 December
(in thousands of United States dollars)
(Unaudited) 2017
(Audited) 2016
Tax losses 599,569 648,984
Total 599,569 648,984
The above tax losses, which translate into deferred tax assets of approximately US$165 million (2016: US$184 million), have not been recognised in respect of these items due to uncertainties regarding availability of tax losses, or there being uncertainty regarding future taxable income against which these assets can be utilised. Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Balance sheet classifications
Balance sheet classification Assets Liabilities Net
(in thousands of United States dollars) 2017 2016 2017 2016 2017 2016
Property, plant and equipment - - 196,921 390,050 196,921 390,050
Provisions (8,293) (4,456) - - (8,293) (4,456)
Interest deferrals (59) (479) 542 - 483 (479)
Tusker acquisition - - 6,235 6,354 6,235 6,354
Tax loss carry-forwards (265,326) (251,510) - - (265,326) (251,510)
Net deferred tax (assets)/liabilities (273,678) (256,445) 203,698 396,404 (69,980) 139,959
Legal entities
Legal entities Assets Liabilities Net
(in thousands of United States dollars) 2017 2016 2017 2016 2017 2016
North Mara Gold Mine Ltd - - 91,321 77,529 91,321 77,529
Bulyanhulu Gold Mine Ltd (160,600) - - 64,539 (160,600) 64,539
Pangea Minerals Ltd1 (8,258) (7,504) - - (8,258) (7,504)
Other (655) (927) 8,212 6,322 7,557 5,395
Net deferred tax (assets)/liabilities (169,513) (8,431) 99,533 148,390 (69,980) 139,959
Uncertainties regarding availability of tax losses in respect of enquiries raised and additional tax assessments issued by the TRA, have been measured using the single best estimate of likely outcome approach resulting in the recognition of substantially all the related deferred tax assets and liabilities. Alternative acceptable measurement policies (e.g. on a weighted average expected outcome basis) could result in a change to deferred tax assets and liabilities being recognised, and the deferred tax charge in the income statement. No deferred tax has been recognised in respect of temporary differences associated with investments in subsidiaries where the Group is in a position to control the timing of the reversal of the temporary differences, and it is probable that such differences will not reverse in the foreseeable future. The aggregate amount of temporary differences associated with such investments in subsidiaries is represented by the contribution of those investments to the Group’s retained earnings and amounted to US$412 million (2016: US$411 million).
LSE:ACA www.acaciamining.com
59
15. Inventories
As at 31 December
As at 31 December
(in thousands of United States dollars) 2017 2016
Raw materials
Ore in stockpiles 22,253 8,269
Mine operating supplies1 117,946 143,610
Work in process 5,103 10,534
Finished products
Gold doré/bullion 7,078 8,692
Gold, copper and silver concentrate2 139,500 13,208
Total current portion of inventory 291,880 184,313
Non-current ore in stockpiles 133,550 98,936
Total 425,430 283,249
1 Mine operating supplies for 2017 includes the impairment of US$30.0 million relating to Bulyanhulu, Refer to note 7 for further details.
2 Gold, copper and silver concentrate on hand relate to finished products at Bulyanhulu (US$ 88.5 million) and Buzwagi (US$US$51.0 million) due to the inability to export concentrate since March 2017.
16. Derivative Financial Instruments
The table below analyses financial instruments carried at fair value, by valuation method. The Group has derivative financial
instruments in the form of economic and cash flow hedging contracts which are all defined as level two instruments as they are valued
using inputs other than quoted prices that are observable for the assets or liabilities. The following tables present the group’s assets
and liabilities that are measured at fair value at 31 December 2017 and 31 December 2016.
Assets Liabilities
For the year ended 31 December 2017
(in thousands of United States dollars) Current Non-current Current Non-current Net fair value
Interest contracts: Designated as cash flow hedges 531 667 481 - 717
Commodity contracts: Not designated as hedges 2,088 240 - - 2,328
Total 2,619 907 481 - 3,045
Assets Liabilities
For the year ended 31 December 2016
(in thousands of United States dollars) Current Non-current Current Non-current Net fair value
Interest contracts: Designated as cash flow hedges 33 255 73 - 215
Commodity contracts: Not designated as hedges 1,310 566 511 30 1,335
Total 1,343 821 584 30 1,550
17. Other Assets
As at 31 December
(Unaudited)
As at 31 December
(Audited)
(in thousands of United States dollars) 2017 2016
Amounts due from government1 11,629 11,748
Operating lease prepayments - TANESCO powerlines 374 809
Prepayments - Acquisition of rights over leasehold land2 35,948 42,250
LSE:ACA www.acaciamining.com
60
Non-current portion of indirect tax receivable3 132,405 7,945
Village housing 151 254
Deferred finance charges 201 291
Total 180,708 63,297
1
Included in this amount are amounts receivable from the NSSF of US$6.7 million (2016: US$5.4 million) as well as amounts due from TANESCO of US$1.0 million (2016: US$3.1 million).
2 Prepayments made to the landowners in respect of acquisition of the rights over the use of leasehold land.
3
The non-current portion of indirect tax receivables was subject to discounting to its current value using a discount rate of 6.5% (2016: 5%). This resulted in a discounting debit of US$13.3 million
(2016: US$9.7 million credit) to the income statement (refer note 8).
18. Trade Receivables and Other Current Assets
As at 31 December
(Unaudited)
As at 31 December
(Audited)
(in thousands of United States dollars) 2017 2016
Trade and other receivables: Amounts due from doré and concentrate sales 18 7,841
Amounts due from realised gains on gold put options 1,356 -
Amounts due from royalty income 1,453 -
Other receivables¹ 16,156 12,023
Due from related parties 40 40
Less: Provision for doubtful debt on other receivables (938) (1,074)
Total 18,085 18,830
1 Other receivables relates to employee and supplier back charge-related receivables and refundable deposits.
Trade receivables other than concentrate receivables are non-interest bearing and are generally on 30-90 day terms. Concentrate
receivables are generally on 60-120 day terms depending on the terms per contract. Trade receivables are amounts due from
customers in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets; if not,
they are presented as non-current assets. The carrying value of trade receivables recorded in the financial statements represents the
maximum exposure to credit risk. The Group does not hold any collateral as security.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less any provisions for impairment. A provision for impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.
As at 31 December
(Unaudited)
As at 31 December
(Audited)
(in thousands of United States dollars) 2017 2016
Other current assets: Current portion of indirect tax receivables² 38,285 128,423
Other receivables and advance payments³ 31,870 21,095
Total 70,155 149,518
2 The current portion of indirect tax receivables includes an amount of US$31.4 million relating to North Mara as it is expected that the current portion will be recovered through offsets against corporate
income tax, as agreed under the MOS entered into in 2012, within the next year.
3 Other receivables and advance payments mainly relate to prepayments for insurance US$9.4 million (2016: US$6.5 million), corporate tax deposit paid at North Mara US$9.5 million and current amounts
receivable from the NSSF of US$4.8 million (2016: US$5.0 million).
LSE:ACA www.acaciamining.com
61
19. Borrowings
During 2013, a US$142 million facility was put in place to fund the bulk of the costs of the construction of one of Acacia’s key growth
projects, the Bulyanhulu CIL Expansion project (“Project”). The Facility is collateralised by the Project, has a term of seven years with a
spread over Libor of 250 basis points. In common with borrowing agreements of this nature the facility includes various covenants as
well as material adverse effect clauses. The interest rate has been fixed at 3.6% through the use of an interest rate swap. The seven
year Facility is repayable in equal bi-annual instalments over the term of the Facility, after a two year repayment holiday period. The full
facility of US$142 million was drawn at the end of 2013. The first principal payment of US$14.2 million was paid in H2 2015 and during
2017 two payments of US$14.2 million were paid. As at 31 December 2017 the balance owing was US$71.0 mil lion (2016: US$99.4
million). Interest accrued to the value of US$0.5 million (2016: US$0.6 million) was included in accounts payable at year end. Interest
incurred on the borrowings as well as hedging losses on the interest rate swap for the year ended 31 December 2017 was US$2.9
million (2016: US$4.0 million).
20. Trade and Other Payables
As at 31 December
As at 31 December
(in thousands of United States dollars) 2017 2016
Trade payables 62,610 84,294
Income tax payable 11,442 13,632
Accrued expenses 40,958 54,344
Payroll-related payables 12,185 20,182
Contract retentions - -
Royalty payable 988 1,114
Provisions for uncertain tax positions1
206,912 34,912
Amounts due to related parties 15,355 14,065
Total 350,450 222,543
1 Included in the 2017 amount are provisions raised for uncertain tax positions of US$68.5 million relating to North Mara and US$103.5 million relating to Bulyanhulu, based on an estimate of the impact of
a comprehensive settlement reflecting the key terms of the Framework announcements made by Barrick and the GoT in October 2017. Included in the amount for 2016 are accruals raised for uncertain
tax positions in order to address the direct impact of the ruling on historic tax assessments and the potential impact this may have on the applicability of certain deductions for prior years at North Mara and
Tulawaka (US$34.8 million).
21. Provisions
Rehabilitation¹ Other² Total
(in thousands of United States dollars) 2017 2016 2017 2016 2017 2016
At 1 January 152,205 128,170 752 761 152,957 128,931 Change in estimate (9,087) 21,956 - - (9,087) 21,956 Utilised during the year (3,106) (175) - (9) (3,106) (184) Unwinding of discount 3,364 2,254 - - 3,364 2,254 Additions - - 7,550 - 7,550
At 31 December 143,376 152,205 8,302 752 151,678 152,957
Current portion (16,348) (6,483) (8,302) (752) (24,650) (7,235)
Non-current portion 127,028 145,722 - - 127,028 145,722
1 Rehabilitation provisions relate to the decommissioning costs expected to be incurred for the operating mines. This expenditure arises at different times over the LOM for the different mine sites and is
expected to be utilised in terms of cash outflows between years 2018 and 2041 and beyond, varying from mine site to mine site. The change in estimate in the current year relates mainly to deferrals in
estimated cash flows resulting in a lower net present value combined with slight changes in the US risk free rates driving a change in discount rate.
LSE:ACA www.acaciamining.com
62
2 Other provisions relate to provisions for legal and tax-related liabilities where the outcome is not yet certain but it is expected that it will lead to a probable outflow of economic benefits in future US$3.9
million (2016: US$0.7 million) as well as severance provisions mainly at Bulyanhulu as part of the reduced operations and redundancies at Buzwagi due to mining activities coming to an end (US$ 4.4
million).
Rehabilitation obligations arise from the acquisition, development, construction and normal operation of mining property, plant and equipment, due to government controls and regulations that protect the environment on the closure and reclamation of mining properties. The major parts of the carrying amount of the obligation relate to tailings and waste rock dumps closure/rehabilitation and surface contouring; demolition of buildings/mine facilities; ongoing water treatment; and ongoing care and maintenance of closed mines. The fair values of rehabilitation provisions are measured by discounting the expected cash flows using a discount factor that reflects the credit-adjusted risk-free rate of interest. Acacia prepares estimates of the timing and amount of expected cash flows when an obligation is incurred and updates expected cash flows to reflect changes in facts and circumstances. The principal factors that can cause expected cash flows to change are: the construction of new processing facilities; changes in the quantities of material in reserves and a corresponding change in the LOM plan; changing ore characteristics that impact required environmental protection measures and related costs; changes in water quality that impact the extent of water treatment required; and changes in laws and regulations governing the protection of the environment. Each year Acacia assesses cost estimates and other assumptions used in the valuation of the rehabilitation provision at each mineral property to reflect events, changes in circumstances and new information available. Changes in these cost estimates and assumptions are recorded as an adjustment to the carrying amount of the corresponding asset. Rehabilitation provisions are adjusted to reflect the passage of time (accretion) calculated by applying the discount factor implicit in the initial fair-value measurement to the beginning-of-period carrying amount of the provision. Settlement gains/losses will be recorded in other (income)/expense. Other environmental remediation costs that are not rehabilitation provisions are expensed as incurred.
20. Commitments and Contingencies
The Group is subject to various laws and regulations which, if not observed, could give rise to penalties. As at 31 December 2017, the
Group has the following commitments and/or contingencies.
a) Legal contingencies
As at 31 December 2017, the Group was a defendant in a number of lawsuits. The plaintiffs are claiming damages and interest thereon
in respect of claims due to one or more of the following: unlawful eviction, termination of services and/or, non-payment for services,
defamation, negligence by act or omission in failing to provide a safe working environment, unpaid overtime, public holiday
compensation and various other commercial/project disputes. The Group’s Legal Counsel is defending the Group’s current position. At
present, Acacia considers the majority of cases to be without merit and therefore the likelihood of any material unfavourable outcome is
remote and therefore no contingency is required.
b) Tax-related contingencies
The TRA has issued a number of tax assessments to the Group related to past taxation years from 2002-onwards. The Group believes
that the majority of these assessments are incorrect and has filed objections and appeals accordingly in an attempt to resolve these
matters by means of discussions with the TRA or through the Tanzanian appeals process. Overall, it is the current assessment that the
relevant assessments and claims by the TRA are without merit. The claims include a TRA assessment to the value of US$41.3 million
for withholding tax on certain historic offshore dividend payments paid by Acacia Mining plc to its shareholders in 2010 to 2013. Acacia
is appealing this assessment on the substantive grounds that, as an English incorporated company, it is not resident in Tanzania for
taxation purposes. The appeal is currently pending at the Court of Appeal. In addition, the Company has raised certain tax provisions
amounting to US$ 300 million in aggregate, based on the potential impact of a comprehensive settlement of all outstanding tax
disputes, including, according to Barrick, historic tax claims, reflecting the key terms of the Framework announcements by Barrick and
the GoT in October 2017. Please refer to note 10 for further information.
c) Exploration and development agreements – Mining Licences
Pursuant to agreements with the Government of the United Republic of Tanzania, the Group was issued special mining licences for Bulyanhulu, Buzwagi, and North Mara mines and mining licences for building materials at Bulyanhulu and Buzwagi Mines. The agreement requires the Group to pay to the government of Tanzania annual rents of US$5,000 per annum per square kilometre for as long as the Group holds the special mining licences and US$2,000 per annum per square kilometre for so long as the Group holds the
LSE:ACA www.acaciamining.com
63
mining licences for building materials. The total commitment for 2018 for the remaining special mining licences and mining licences for building materials amount to US$0.62 million. d) Purchase commitments
At 31 December 2017, the Group had purchase obligations for supplies and consumables of approximately US$32.5 million (2016: US$47.0 million). e) Capital commitments
In addition to entering into various operational commitments in the normal course of business, the Group entered into contracts for capital expenditure of approximately US$10.2 million in 2017 (2016: US$13.0 million).
22. Related party balances and transactions
The Group has related party relationships with entities owned or controlled by Barrick Gold Corporation, which is the ultimate controlling party of the Group. The Company and its subsidiaries, in the ordinary course of business, enter into various sales, purchase and service transactions and other professional services arrangements with others in the Barrick Group. These transactions are under terms that are on normal commercial terms and conditions. These transactions are not considered to be significant. At 31 December 2017 the Group had no loans of a funding nature due to or from related parties (31 December 2016: zero). 23. Post Balance Sheet Events
a) Sale of non-core mineral royalty
As previously announced, Acacia has agreed to divest a non-core royalty over the Houndé Mine in Burkina Faso for total consideration of US$45 million. The 2% net smelter royalty has been owned by Acacia and its predecessor companies since 2010. Following a competitive process the royalty has been purchased by Sandstorm Gold Ltd, a TSX- and NYSE-listed company. The transaction has closed following all conditions being met and monies were received by Acacia in January 2018.
b) Entry into further gold price protection measures
As previously announced, Acacia has bought additional put options covering 120,000 ounces of gold at a strike price of US$1,320 per
ounce for a cost of US$2.0 million. The options will expire in equal instalments of 30,000 ounces per month between March and June.
These options, in addition to those bought in September 2017 at a strike price of US$1,300 per ounce, provide a minimum price for the
majority of the Group’s expected production for the first half of 2018 above our budgeted gold price of US$1,200 per ounce, with full
upside exposure should the gold price continue to trade above the respective strike prices.
LSE:ACA www.acaciamining.com
64
Reserves and Resources
Mineral reserves and mineral resources estimates contained in this Report have been calculated as at 31 December 2017 in
accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities, unless otherwise stated.
Canadian Institute of Mining, Metallurgy and Petroleum (‘CIM’) definitions were followed for mineral reserves and resources.
Calculations have been reviewed, verified (including estimation methodology, sampling, analytical and test data) and compiled by
Acacia personnel under the supervision of Acacia Qualified Persons: John Haywood, Chief Geologist – Operations, and David
Blamires, Manager - Long Term Planning. However, the figures stated are estimates and no assurances can be given that the indicated
quantities of metal will be produced. In addition, totals stated may not add up due to rounding.
Mineral reserves have been calculated using an assumed long-term average gold price of US$1,100 per ounce, a silver price of
US$15.00 per ounce and a copper price of US$2.50 per pound. Reserve calculations incorporate current and/or expected mine plans
and cost levels at each property and reflect contained ounces. Mineral resources at Acacia mines have been calculated using an
assumed long-term average gold price of US$1,400 per ounce, a silver price of US$19.00 per ounce and a copper price of US$2.80 per
pound and reflect contained metal.
Mineral resources at Acacia exploration properties have been calculated using an assumed long-term average gold price of
US$1,500.00 per ounce for Tankoro and Golden Ridge (however, this Mineral Resource has now been removed from the declaration);
whilst Nyanzaga is a foreign estimate compiled to JORC Code 2012 and reported above a lower cut-off grade of 1.5g/t. The new
Mineral Resource estimate for the Liranda Project in Kenya is reported above varying lower cut-off grades appropriate for the
mineralisation. Resources have been estimated using varying cut-off grades, depending on the type of mine or project, its maturity and
ore types at each property.
Reserve estimates are dynamic and are influenced by changing economic conditions, technical issues, environmental regulations and
any other relevant new information and therefore these can vary from year to year. Resource estimates can also change and tend to be
influenced mostly by new information pertaining to the understanding of the deposit and secondly the conversion to ore reserves. In
addition, estimates of inferred mineral resources may not form the basis of an economic analysis and it cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, investors are cautioned not to assume
that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to
a higher category. Likewise, investors are cautioned not to assume that all or any part of measured or indicated mineral resources will
ever be upgraded to mineral reserves.
LSE:ACA www.acaciamining.com
65
Mine Gold Reserves & Resources
2017 YE 2016 YE
Tonnes
(000's)
Grade Au
(g/t)
Ounce
(000's)
Tonnes
(000's)
Grade Au
(g/t)
Ounce
(000's)
Bulyanhulu - Underground Proven and probable 14,500 9.70 4,522 15,662 9.75 4,910
Mineral Resource 14,409 9.04 4,188 13,904 8.91 3,982
Inferred 24,208 9.75 7,587 24,208 9.75 7,587
Bulyanhulu - Tailings Proven and probable 5,334 1.05 180 6,181 1.05 209
Mineral Resource - - - - - -
Inferred - - - - - -
Buzwagi - Open Pit Proven and probable 132 1.71 7 5,993 1.74 336
Mineral Resource 4,504 1.04 150 25,873 1.23 1,024
Inferred 49,918 0.77 1,236 2,058 1.37 91
Buzwagi - Stockpile Proven and probable 14,122 0.91 414 9,067 0.96 279
Mineral Resource - - - - - -
Inferred - - - - - -
North Mara - Open Pit Proven and probable 15,141 1.74 847 16,946 2.04 1,110
Mineral Resource 6,664 1.95 417 15,261 2.07 1,018
Inferred 447 1.20 17 3,600 0.84 97
North Mara - Stockpiles Proven and probable 4,695 0.95 144 3,452 1.13 125
Mineral Resource - - - - - -
Inferred - - - - - -
North Mara - Gokona UG Proven and probable 6,652 6.26 1,338 3,393 6.01 656
Mineral Resource 570 3.94 72 2,270 3.35 244
Inferred 2,642 5.08 432 6,356 3.39 693
North Mara - Nyabigena UG Proven and probable - - - - - -
Mineral Resource 1,237 3.19 127 1,237 3.19 127
Inferred 50 4.20 7 50 4.20 7
North Mara - Nyabirama UG Proven and probable - - - - - -
Mineral Resource 3,756 3.84 463 1,401 3.19 144
Inferred 3,208 3.86 398 483 3.16 49
Total Proven and probable 60,577 3.83 7,453 60,694 3.91 7,625
Mineral Resource 31,141 5.41 5,418 59,945 3.39 6,539
Inferred 80,473 3.74 9,676 36,755 7.21 8,523
LSE:ACA www.acaciamining.com
66
Exploration Property Gold Reserves & Resources 1
2017 YE 2016 YE
Tonnes
(000's)
Grade Au
(g/t)
Ounce
(000's)
Tonnes
(000's)
Grade Au
(g/t)
Ounce
(000's)
Tankoro (50%) Proven and probable - - - - - -
Mineral Resource - - - - - -
Inferred 21,500 1.52 1,050 21,500 1.52 1,050
Nyanzaga (85%) Proven and probable - - - - - -
(Tusker + Kilimani) Mineral Resource 17,680 4.06 2,308 22,230 3.49 2,495
Inferred 2,465 3.84 304 4,590 3.49 515
Liranda Proven and probable - - - - - -
(Isulu/Bushiangala) Mineral Resource - - - - - -
Inferred 2,889 12.60 1,171 - - -
Golden Ridge Proven and probable - - - - - -
Mineral Resource - - - 7,944 2.78 710
Inferred - - - 1,414 2.27 103
Total Exploration Proven and probable - - - - -
Mineral Resource 17,680 4.06 2,308 30,174 3.30 3,205
Inferred 26,854 2.92 2,524 27,504 1.89 1,667
Total Acacia Proven and probable 60,577 3.83 7,453 60,694 3.91 7,625
Mineral Resource 48,821 4.92 7,725 90,119 3.36 9,744
Inferred 107,328 3.54 12,200 64,259 4.93 10,190
1Exploratory Property Gold Resources have been estimated using a gold price of $1,500/oz for Golden Ridge and Tankoro; and reported above 1.5g/t Au lower cut-off for Nyanzaga
Acacia holding in the Nyanzaga property has been reduced to 85% fo llowing completion of Pre-Feasibility Study by OreCorp.
Liranda has been reported above variable lower cut-o ff grades. Golden Ridge was removed due to ownership uncertainty and awaits clarification by Government of Tanzania
Contained Copper Reported within Gold Reserves & Resources 1
2017 YE 2016 YE
Tonnes
(000's)
Grade Cu
(%)
Pounds
(000's)
Tonnes
(000's)
Grade Cu
(%)
Pounds
(000's)
Bulyanhulu-Underground Proven and probable 14,500 0.54 172,798 15,662 0.55 188,283
Mineral Resource 14,409 0.44 138,961 13,904 0.44 136,247
Inferred 24,208 0.63 337,251 24,208 0.63 337,251
Bulyanhulu- Tailings Proven and probable - - - - - -
Mineral Resource - - - - - -
Inferred - - - - - -
Buzwagi Proven and probable - - - 15,060 0.10 32,497
Mineral Resource 4,504 0.11 10,820 25,873 0.12 66,187
Inferred 49,918 0.08 89,116 2,058 0.13 5,760
Total Proven and probable 14,500 0.54 172,798 30,722 0.33 220,780
Mineral Resource 18,913 0.36 149,781 39,777 0.23 202,434
Inferred 74,126 0.26 426,367 26,266 0.59 343,010 1Buzwagi Proven and Probable Reserve is formed by the Low Grade Stockpiles being processed without flo tation circuit operation, and thus no Copper content is reported
Buzwagi M ineral Resources may be mined in future with flo tation circuit in operation, and thus copper content is reported.
LSE:ACA www.acaciamining.com
67
Contained Silver Reported within Gold Reserves & Resources
2017 YE 2016 YE
Tonnes
(000's)
Grade Ag
(g/t)
Ounce
(000's)
Tonnes
(000's)
Grade Ag
(g/t)
Ounce
(000's)
Bulyanhulu-Underground Proven and probable 14,500 7.87 3,668 15,662 8.11 4,085
Mineral Resource 14,409 6.61 3,062 13,904 6.64 2,969
Inferred 24,208 6.96 5,416 24,208 6.96 5,416
Bulyanhulu- Tailings Proven and probable 5,334 3.55 610 6,181 3.56 708
Mineral Resource - - - - - -
Inferred - - - - - -
Total Proven and probable 19,834 6.71 4,277 21,843 6.82 4,793
Mineral Resource 14,409 6.61 3,062 13,904 6.64 2,969
Inferred 24,208 6.96 5,416 24,208 6.96 5,416
LSE:ACA www.acaciamining.com
68
Mine Gold Reserves
Mine Classification Tonnes Grade Au (g/t) Contained Au (oz)
Bulyanhulu -Underground Proven 2,917,033 10.66 1,000,203
Probable 11,583,055 9.46 3,521,935
Total (P+P) 14,500,088 9.70 4,522,138
Bulyanhulu - Tailings Proven - - -
Probable 5,334,234 1.05 180,074
Total (P+P) 5,334,234 1.05 180,074
Buzwagi - Open Pit Proven 132,165 1.71 7,258
Probable - - -
Total (P+P) 132,165 1.71 7,258
Buzwagi - Stockpiles Proven 14,121,585 0.91 413,944
Probable - - -
Total (P+P) 14,121,585 0.91 413,944
North Mara - Open Pit Proven 1,510,195 2.10 101,963
Probable 13,631,060 1.70 745,023
Total (P+P) 15,141,255 1.74 846,986
North Mara - Stockpiles Proven 4,695,233 0.95 143,932
Probable - - -
Total (P+P) 4,695,233 0.95 143,932
North Mara - Gokona UG Proven 2,085,586 5.86 393,166
Probable 4,566,366 6.44 945,133
Total (P+P) 6,651,952 6.26 1,338,299
North Mara - Nyabigena UG Proven - - -
Probable - - -
Total (P+P) - - -
North Mara - Nyabirama UG Proven - - -
Probable - - -
Total (P+P) - - -
Total Mine Gold Reserves Proven 25,461,797 2.52 2,060,465
Probable 35,114,715 4.78 5,392,165
Total (P+P) 60,576,511 3.83 7,452,631
LSE:ACA www.acaciamining.com
69
Contained Copper Reported within Gold Reserves
Classification Tonnes Grade Cu (%) Contained Cu(lbs)
Bulyanhulu -Underground Proven 2,917,033 0.43 27,972,038
Probable 11,583,055 0.57 144,826,151
Total 14,500,088 0.54 172,798,189
Bulyanhulu - Tailings Proven - - -
Probable - - -
Total - - -
Buzwagi Proven - - -
Probable - - -
Total - - -
Total Copper Reported within Gold Reserves
Proven 2,917,033 0.43 27,972,038
Probable 11,583,055 0.57 144,826,151
Total 14,500,088 0.54 172,798,189
Contained Silver Reported within Gold Reserves
Classification Tonnes Grade Ag (g/t) Contained Ag (oz)
Bulyanhulu -Underground Proven 2,917,033 5.59 524,327
Probable 11,583,055 8.44 3,143,439
Total 14,500,088 7.87 3,667,766
Proven - - -
Bulyanhulu - Tailings Probable 5,334,234 3.55 609,659
Total 5,334,234 3.55 609,659
Total Silver Reported within Gold Reserves
Proven 2,917,033 5.59 524,327
Probable 16,917,289 6.90 3,753,098
Total 19,834,322 6.71 4,277,425
LSE:ACA www.acaciamining.com
70
Mine Gold Resource (Measured & Indicated, exclusive of Reserves)Mine Classification Tonnes Grade Au (g/t) Contained Au (oz)
Bulyanhulu -Underground Measured 1,367,300 11.55 507,654
Indicated 13,042,060 8.78 3,680,403
Total (M+I) 14,409,360 9.04 4,188,057
Bulyanhulu - Tailings Measured - - -
Indicated - - -
Total (M+I) - - -
Buzwagi - Open Pit Measured - - -
Indicated 4,504,014 1.04 150,020
Total (M+I) 4,504,014 1.04 150,020
Buzwagi - Stockpiles Measured - - -
Indicated - - -
Total (M+I) - - -
North Mara - Open Pit Measured 1,756,883 2.27 128,508
Indicated 4,907,230 1.83 288,721
Total (M+I) 6,664,113 1.95 417,229
North Mara - Stockpiles Measured - - -
Indicated - - -
Total (M+I) - - -
North Mara - Gokona UG Measured 182,852 5.80 34,092
Indicated 386,856 3.06 38,055
Total (M+I) 569,708 3.94 72,147
North Mara - Nyabigena UG Measured 80,929 3.16 8,216
Indicated 1,156,078 3.19 118,548
Total (M+I) 1,237,007 3.19 126,764
North Mara - Nyabirama UG Measured - - -
Indicated 3,756,376 3.84 463,351
Total (M+I) 3,756,376 3.84 463,351
Total Mine Resource (M+I) Measured 3,387,964 6.23 678,470
Indicated 27,752,614 5.31 4,739,098
Total (M+I) 31,140,578 5.41 5,417,568