african barrick gold plc (“abg’’) reports half year 2013 ...€¦ · 30/07/2013 · results...

African Barrick Gold Half Year Report for the six months ended 30 June 2013

1 LSE: ABG

30 July 2013

Results for the 6 months ended 30 June 2013 (Unaudited)

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

African Barrick Gold plc (“ABG’’) reports half year 2013 results

“We have delivered strong operational performance in the first half, with production tracking ahead of guidance and cash costs

below the bottom of the guidance range,” said Greg Hawkins, Chief Executive Officer of African Barrick Gold. “We have taken

decisive action at all of our mines, including the reshaping of the life of mine at Buzwagi, in order to adapt to the lower gold

price environment. We have a solid base from which to implement the findings of the Operational Review, which has identified

potential cost savings of US$185 million across the group. The combination of asset optimisation focused on cash flow

generation and lower gold price assumptions has contributed to a non-cash post tax impairment charge of US$727 million.

Having taken these steps, we remain confident in the ability of our asset base to deliver shareholder value which is reflected in

the decision to continue with our stated dividend policy. We remain on track to achieve our full year guidance.”

First Half Highlights

ABG reports adjusted net earnings2 of US$39.3 million (US9.6 cents per share), after one-off adjustments of US$741 million,

primarily due to non-cash impairment charges of US$727 million, post tax related to Buzwagi (US$543 million), North Mara

(US$128 million), Tulawaka (US$17 million) and Nyanzaga (US$39 million). The net loss amounted to US$701.2 million (a

loss of US171.0 cents per share) and operational cash flow was US$99.0 million.

Other significant highlights include:

H1 gold production1 of 311,838 ounces and cash costs

2 of US$903 per ounce sold (US$876 excluding Tulawaka)

Q2 gold production1 of 165,733 ounces and cash costs

2 of US$879 per ounce sold (US$862 excluding Tulawaka)

Revenue of US$499.8 million and adjusted EBITDA2 of US$139.9 million

H1 all-in sustaining costs2 of US$1,507 per ounce sold (US$1,483 excluding Tulawaka)

Cash balance of US$321 million as at 30 June 2013

Targeted annual cost savings of US$185 million identified through the Operational Review

Bulyanhulu CIL Expansion project remains on track for first production in Q1 2014

Proposed interim dividend of US 1.0 cent per share

Operational Review Update

As previously communicated, we initiated a comprehensive Operational Review of our entire business earlier this year with the

aim of making sustainable and meaningful reductions to our cost base, optimising our life of mine plans and as a result driving

improved returns from our asset base. The Review has identified US$185 million of potential savings, with over US$100 million

of the savings expected to be realised in 2013. The overall savings consist of:

‒ US$95 million of operating cost reductions

‒ US$15 million reduction in corporate administration expenses

‒ US$50 million reduction in sustaining capital expenditure

‒ US$25 million reduction in exploration spend

Whilst the review remains ongoing, we have so far identified operating cost savings of up to US$95 million (approximately a

15% reduction), and corporate overhead savings of US$15 million (approximately a 30% reduction). All savings are based off

2012 reported numbers. We have also absorbed inflationary and volume increases at each of our mines in 2013. Volumes

have significantly increased at Buzwagi; but we have absorbed the additional costs and still expect reductions year on year. Of

the operating cost savings targeted, around US$55 million are attributed to Bulyanhulu, US$25 million to North Mara and

US$15 million to Buzwagi. This is in addition to the previously announced savings of US$50 million in sustaining capital and

US$25 million in our exploration spend from 2012.

In addition to this we have re-engineered the Buzwagi mine plan with the aim of further lowering the all-in sustaining cost of

the operation and ensuring its sustainability at current gold prices. This has involved optimising the Stage 3 cut back and

removing the majority of the Stage 4 cut back from the mine plan which substantially reduces the amount of waste movement

required and optimises the grade as well as recoveries. As a result, the mine life of the operation has been shortened to six

and a half years, with mining ceasing after three and a half years and stockpiles on hand being processed for a further three

years thereafter.


2 LSE: ABG

Key statistics Three months ended 30 June

Six months ended 30 June

(Unaudited) 2013 20124

2013 2012

4

Tonnes mined (thousands of tonnes) 15,141 11,834

29,142 21,673

Ore tonnes mined (thousands of tonnes) 1,727 1,848

3,402 3,595

Ore tonnes processed (thousands of tonnes) 2,103 1,840

4,048 3,742

Process recovery rate (percent) 88.5% 87.4%

88.7% 86.7%

Head grade (grams per tonne) 2.8 3.0

2.7 2.9

Attributable gold production (ounces)1 165,733 153,099

311,838 297,742

Attributable gold sold (ounces)1 171,702 157,224

319,934 302,641

Copper production (thousands of pounds) 3,122 3,121

5,584 6,126

Copper sold (thousands of pounds) 2,756 3,443

6,113 5,959

Cash cost per tonne milled (US$)2 72 78

71 73

Per ounce data (US$)

Average spot gold price

3 1,415 1,609

1,523 1,651

Average realised gold price2 1,366 1,591

1,480 1,642

Total cash cost2 879 918

903 896

All-in sustaining cost2 1,416 1,536

1,507 1,465

Average realised copper price (US$/pound) 3.04 3.07

3.23 3.53

Financial results

Three months ended 30 June



2013 2012

4

(US$‟000)

Revenue 245,103 266,930

499,752 534,467

Cost of sales (210,209) (196,215)

(414,884) (374,737)

Gross profit 34,894 70,715

84,868 159,730

Corporate administration 5 (9,022) (10,095)

(14,909) (24,985)

Exploration and evaluation costs (3,156) (3,870)

(7,554) (10,385)

Corporate social responsibility expenses (3,472) (4,611)

(6,918) (6,750)

Impairment charges (927,690) -

(927,690) -

Other charges (18,279) (1,360)

(22,093) (4,275)

(Loss)/profit before net finance cost (926,725) 50,779

(894,296) 113,335

Finance income 410 813

1,005 1,079

Finance expense5 (2,218) (2,737)

(4,775) (5,313)

(Loss)/profit before taxation (928,533) 48,855

(898,066) 109,101

Tax credit/(expense) 198,906 (16,301)

184,648 (35,022)

Net (loss)/profit for the period (729,627) 32,554

(713,418) 74,079

Attributed to:

- Non-controlling interests (7,683) (807)

(12,188) 370

- Owners of the parent (net (loss)/earnings) (721,944) 33,361

(701,230) 73,709


3 LSE: ABG

Other Financial information

Three months ended 30 June Six months ended 30 June

(Unaudited, in US$‟000 unless otherwise stated) 2013 20124

2013

20124

EBITDA2,5

48,829 86,735 130,771 184,104

Adjusted EBITDA2,5

56,190 86,735 139,906 184,104

Net (loss)/ earnings (721,944) 33,361 (701,230) 73,709

(Loss)/earnings per share (EPS) (cents)

(176.0) 8.1 (171.0) 18.0

Adjusted net earnings2

12,705 33,361 39,334 73,709

Adjusted net earnings per share (AEPS) (cents)2

3.1 8.1 9.6 18.0

Dividend per share (cents) 1.0 4.0 1.0 4.0

Cash and cash equivalents 320,873 503,667 320,873 503,667

Cash generated from operating activities 41,691 62,345 99,017 127,102

Operating cash flow per share (cents)2

10.2 15.2 24.1 31.0

Capital Expenditure6 86,088 78,397 186,928 141,699

Draw down of long term debt (Borrowings) 30,000 - 80,000 - 1 Production and sold ounces reflect equity ounces which exclude 30% of Tulawaka‟s production and sales base.

2 Average realised gold price, total cash cost per ounce, all-in sustaining cost per ounce, cash cost per tonne milled, EBITDA, adjusted EBITDA, adjusted net earnings, adjusted net earnings per share and operating cash flow per

share are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ”Non IFRS measures”‟ on page 25 for definitions. 3 Reflect the London PM fix price.

4 Restated for the impact of capitalised stripping due to the adoption of IFRIC 20.

5 Three and six months ended 30 June 2012 restated to reclassify bank charges from corporate administration to finance expense.

6 Includes non-cash reclamation asset adjustments and finance lease purchases in 2012.

Second Quarter Review

The second quarter witnessed strong performance at both North Mara and Buzwagi with production up 54% and 33%

respectively on the prior year periods. At Bulyanhulu, the mine made good progress towards returning to normalised mining

rates with production up 44% on the first quarter of 2013.

Buzwagi continued to show both year on year and quarter on quarter improvements on all key operating metrics, most notably

with mill throughput ahead of nameplate capacity in Q2. Although head grade was 7% lower than the prior year due to the

blending of stockpiles for mill feed, increased recovery rates and improved mill throughput rates drove production of 45,726

ounces, a 33% increase on Q2 2012.

At North Mara, mining continued from the higher grade zones in Gokona resulting in a head grade of 3.6 grams per tonne (g/t).

Mill recovery rates increased to 87.0%, predominantly as a result of the 2012 gold plant upgrade further assisted by the higher

grade ore processed. As a result, production for the quarter amounted to 63,774 ounces, an increase of 54% on Q2 2012.

At Bulyanhulu, the impact from the operational issues experienced in Q4 2012 and Q1 2013 resulted in production of 54,938

ounces, 21% below the prior year period as a result of lower throughput and head grade. During the quarter the mine‟s

workforce was returned to normal levels and we continued to add paste fill capacity which led to production increasing 44%

over Q1 2013.

At Tulawaka, the focus was on the commencement of the closure process. As a result of the continued clean-up of the site

and the process plant, 1,294 ounces were produced in the quarter. All mining and milling activities have now ceased and we

are in discussions with the Government to finalise the ultimate future use of the site.

Total tonnes mined amounted to 15.1 million tonnes, an increase of 28% from 11.8 million in 2012, mainly driven by increased

mining rates at Buzwagi and North Mara. Ore tonnes mined of 1.7 million tonnes were 7% lower than in 2012 as a result of the

reduction at Buzwagi, which was partially offset by an increase in ore tonnes mined at North Mara due to the continued mining

of high grade zones in Gokona.

Ore tonnes processed amounted to 2.1 million tonnes, an improvement of 14% from 2012. Increased throughput at Buzwagi

due to a stable power supply and process plant improvements was partially offset by lower throughput at North Mara.

Head grade for the quarter of 2.8 g/t was 7% lower than in 2012 (3.0 g/t). This was due to an increased proportion of group

throughput being from Buzwagi, where more lower grade material was processed.

Our total cash costs of US$879 per ounce sold (US$862 per ounce excluding Tulawaka) were 4% lower than Q2 2012. The

decrease was primarily due to increased capitalised stripping costs at Buzwagi and North Mara (US$149/oz). This was

partially offset by increased energy and fuel costs (US$15/oz) and increased consumable and contracted service costs

(US$26/oz) due to the increased mining and milling activity, and an increased change in inventory charge due to the

drawdown of higher cost inventory, partially offset by the increased production base (US$60/oz).

All-in sustaining cost per ounce sold (“AISC”) of US$1,416 (US$1,404 excluding Tulawaka) was 8% lower than Q2 2012,

driven by lower cash costs, corporate administration costs and a higher production base.

Cash costs of US$72 per tonne milled for the quarter have decreased by 8% on 2012 (US$78 per tonne), primarily as a result

of the above factors and the increased group throughput.


4 LSE: ABG

Gold sales amounted to 171,702 ounces, and were 4% higher than production, as finished gold on hand at Bulyanhulu and

North Mara at the beginning of the quarter was sold.

Copper production for the quarter of 3.1 million pounds was in line with Q2 2012. Increased production at Buzwagi was offset

by lower production at Bulyanhulu.

Revenue of US$245.1 million was 8% lower than Q2 2012 as increased sales volumes were offset by a 14% decrease in the

realised price of US$1,366 per ounce sold (US$1,591 per ounce sold in the prior year period). Realised prices were below the

average gold price for the quarter due to sales being skewed towards the end of the quarter when the gold price was lower, as

well as the revaluation of gold receivables under concentrate sales agreements, negatively impacted by lower June 2013

average prices.

Adjusted EBITDA of US$56.2 million was 35% lower than in Q2 2012, mainly driven by lower revenue, an increased direct

cost base as a result of higher production volumes (US$3.5 million) and increased other charges (US$16.9 million) due to the

allocation of non-operational Tulawaka costs including retrenchments, costs associated with the Operational Review, and

increased losses on currency hedges not qualifying for hedge accounting.

Capital expenditure for the quarter amounted to US$86.1 million compared to US$78.4 million in Q2 2012. Key capital

expenditure included the Bulyanhulu CIL Expansion project (US$23.3 million) and Upper East project (US$4.4 million),

capitalised stripping at Buzwagi and North Mara (US$39.7 million), capitalised underground development at Bulyanhulu

(US$11.8 million) and sustaining capital investments in mining equipment, tailings and infrastructure at Bulyanhulu (US$4.7

million), Buzwagi (US$4.1 million) and North Mara (US$4.3 million). Included in capital expenditure is negative non-cash

reclamation adjustments of US$17.3 million due a change to discount rates used in calculating the provision.

First Half Review

For the first half of 2013 revenue amounted to US$499.8 million with adjusted EBITDA of US$139.9 million. Adjusted EBITDA

was down 24% on the prior year as a result of the lower realised gold price, activity driven increases in direct mining costs of

US$12.1 million, and increased other charges of US$17.8 million. This was partially offset by a reduction in corporate

administration costs of US$10.0 million and a reduction of US$2.8 million in exploration and evaluation costs.

Cash generated from operating activities for the six months amounted to US$99.0 million which was US$40.9 million below

adjusted EBITDA. This was mainly due to an increase in indirect tax receivables of US$41.8 million due to the change of VAT

relief administration measures for mining companies by the Tanzanian Government during Q4 2012 which impacts on the

timing of receivables, partially offset by a reduction in inventories of US$17.6 million, a reduction in receivables of US$7.0

million and the impact of other charges of US$22.1 million. As a result, and combined with cash capital expenditures of

US$207.2 million, the payment of the 2012 final dividend of US$50.4 million and the drawdown of US$80.0 million under the

debt facility for the Bulyanhulu CIL Expansion project, our cash balance at the end of the June 2013 was down US$80.5

million from December 2012 at US$320.9 million.

Operational Review

The ongoing Operational Review is focused on five key areas: Operating cost reductions, Capital discipline, Organisational

structure, Corporate overhead cost reductions and Mine planning deliverability. We have identified US$185 million of potential

cost savings across these areas as detailed below:

1. Operating cost reductions - US$95 million

The Operating Review project team have analysed in detail each area of operating cost expenditure in our business with the

aim of identifying and quantifying all areas of potential savings as well as improving productivity and efficiency levels in each of

these areas. They have subsequently developed implementation plans for each of these areas which will see the benefits

predominantly achieved over the next 18 months. The key reductions by area identified are:

Labour structure and controls - reduction of up to 20% from 2012

Procurement – reduction of 5-10% from 2012

Maintenance – reduction of 5-10% from 2012

Aviation, Camp Services, Travel, Vehicles and Administration – reduction of 30-40% from 2012

Consumables – reduction of 5-10% from 2012

Contract Management and External Services – reduction of 5-10% from 2012

Security – reduction of 15-20% from 2012

2. Capital discipline - US$50 million

As previously announced, we plan to reduce our sustaining capital expenditure by approximately US$50 million compared to

2012. We are reassessing all of our future capital expenditure to identify further opportunities to cut capital expenditure into

2014 and beyond.

In addition, we have decided to temporarily defer all expansionary capital projects other than the ongoing construction of the

Bulyanhulu CIL Expansion project. This measure will help to preserve cash and ensure optionality as we move through and

implement the Operational Review.


5 LSE: ABG

Whilst this means we are delaying the decision on the Upper East Project at Bulyanhulu and we will incorporate the project into

the review of the life of mine as part of the Operational Review as we decide how best to proceed with the future development

of this key asset.

Desktop work will continue at Nyanzaga in order to continue to improve our understanding of the structural controls of the

mineralisation and ultimately to see if we can develop the mine with lower upfront capital expenditures.

3. Organisational structure – 20% reduction in labour costs

We have undertaken a zero based review of our entire organisation in order to ensure that we have the appropriate staffing

levels, mix of employees and contractors and the optimal combination of international and Tanzanian employees in order to

meet our objectives without impacting production. As a result, we have identified opportunities to reduce our overall labour

costs by around 20% through a reduction in staffing levels reducing the proportion of international employees and improving

labour controls.

4. Corporate overhead cost reductions - US$15 million

As part of the zero based review of our organisation, we have also decided to simplify the corporate structure and reduce the

scale of our support offices. As a result, we are targeting at least a US$15 million reduction to our corporate administration

expenses, which incorporates the previously announced US$8 million reduction and represents over a 30% reduction in cost

over 2012.

5. Mine planning deliverability

In addition to the review of our operating costs, we are in the process of reviewing of our life of mine plans at each of our

operations and the options available to ABG to enhance cash flow generation in the near term.

Buzwagi

As Buzwagi is our highest cost and lowest grade mine we have focused on updating the mine plan there ahead of our other

operations. The revised plan is aimed at significantly reducing the all-in sustaining cost of the mine and generating positive

cash flow at current gold prices. The life of mine has been reduced to six and a half years, with mining ceasing after three and

a half years and stockpiles on hand being processed thereafter.

The new life of mine requires the movement of 7-8 million tonnes less of material on average for the next three and a half

years which will substantially reduce our waste stripping costs. The current cost per tonne of material moved is approximately

US$3.35. We will also be able to reduce sustaining capital given the age profile of the mining fleet and the reduced length of

time mining operations will continue. We will also ensure that our workforce is appropriately sized for the level of ongoing

activity.

The revised life of mine cost profile will provide additional benefits over and above those detailed in the operating cost

initiatives above.

The mine is expected to remain predominantly on self generated power and therefore we expect mill throughput to remain at

nameplate capacity, with similar recoveries to H1 2013. Head grade is expected to average 1.6-1.7 g/t over the next three and

a half years, falling to approximately 1.0 g/t as we process stockpiles. The impact of the shortened mine life will result in the

production of around 1.1 million ounces over the LOM which will result in the remaining reserves being a reclassified to

resources.

North Mara

We are progressing our review at North Mara in order to optimise the remaining life of mine given the operating environment

there. The final review will incorporate a number of factors, particularly the likely availability and cost of land and is expected to

be completed during the second half of the year. At the same time, we have reassessed the asset based on a US$1,300 gold

price and as a result we have removed the Nyabirama Stage 5 and Gokona Stage 4 cutbacks from the current mine plans

which reduces the life of mine to 10 years and will result in the reclassification of approximately 0.5 Moz of reserves to

resources.

Bulyanhulu

At Bulyanhulu the focus remains on ensuring that production is appropriate to the size of the ore body. We are reviewing the

mine plan in order to optimise the value of the asset and ascertain the best methods for further developing the infrastructure in

order to improve mining rates. We continue to expect the review to be completed during the second half of the year.

Tulawaka

As previously announced, one of the first steps in the Operational Review was to not extend the life of Tulawaka further given

the cost profile of the operation. The mine has now ceased production and we are proceeding with closure activities while

assessing potential opportunities to divest the asset.


6 LSE: ABG

In addition to the above core elements of the Operational Review, we are following a number of other initiatives which we

believe will deliver incremental value to the business. The most relevant of these include:

Margin benefits and working capital savings

As part of the maintenance programmes referred to above we are also targeting increased mobile equipment availability across

our mine sites which we believe has significant potential to improve the margin benefits at those sites. We also have a number

of grade control initiatives underway aimed at reducing dilution through improved blast monitoring systems at Buzwagi and

North Mara, together with a reduction in overbreak at Bulyanhulu.

With respect to working capital, we are implementing additional inventory management controls, assessing the potential for

discounts for early payment opportunities with our major suppliers and optimising our supply chain processes.

We have not factored the benefits from these programmes into the savings detailed above.

Exploration

As previously announced we have scaled back our exploration activities in 2013, resulting in a cost saving of $25 million when

compared to 2012. This year we are focusing our exploration programme on potential high return programmes at Bulyanhulu

and on two targets in the North Mara region. In Kenya we are undertaking extensive low cost sampling and testing of

anomalies in order to prepare for future programmes. Due to our focused approach to exploration, we are in the process of

rationalising our low priority exploration licenses, which will result in additional cost savings when complete.

Implementation Timetable

Of the US$95 million operational cost savings identified above, we estimate that 30% will have been achieved by the end of

2013 and over 90% by the end of 2014. In addition, the corporate G&A, capital and exploration savings will all be achieved in

2013 and we will be assessing the opportunity to make further reductions in 2014 and beyond.

Other developments

Carrying value review

As a result of the substantial decrease in the gold price during the second quarter, we have decided to set the price at which

we calculate the carrying value of our assets at US$1,300 per ounce sold. This has required us to review each of our cash

generating units (CGU‟s) for any impairment trigger and to reassess the operating performance of each CGU in order to

ensure optimised returns and cash flows in the lower gold price environment. Each of the operating mines and the exploration

business are classified as separate CGU‟s.

Buzwagi

As reported in our 2012 annual report, Buzwagi‟s current cost structures combined with the low grade nature of the ore body

made it susceptible to changes in the gold price. As a result, we have today announced an update to the mine plan at

Buzwagi, which will significantly shorten the mine life, but reduces the AISC of the mine and will enable the mine to generate

positive cash flow at current gold prices.

The changes to both the mine plan and the long term gold price assumption triggered a review of the recoverable amount for

Buzwagi. The review determined that the recoverable amount was less than the carrying value as at 30 June 2013, and

therefore a post tax impairment of US$542.7 million has been recorded. Following the impairment, Buzwagi‟s carrying value is

now US$209.1 million. Refer to note 7 of the consolidated financial information for more detail.

North Mara

At North Mara the change to the gold price assumption has triggered a review of the mine plan of the asset. As a result, we

have updated the existing life of mine for the current cost structures and gold price which has resulted in the Nyabirama Stage

5 and Gokona Stage 4 cutbacks being deemed to be uneconomic. This has resulted in the removal of the projected production

contained in those Stages from the recoverable value of North Mara which has triggered a review of the recoverable amount.

As a result of the review, the recoverable amount is less than the carrying value as at 30 June 2013, and therefore a post tax

impairment of US$128.1 million has been recorded. Following the impairment, North Mara‟s carrying value is now US$456.9

million.

At the same time, we are progressing our review at North Mara in order to optimise the remaining life of mine and assess the

viability of this given the current operating environment. This will incorporate a number of factors, in particular the availability

and cost of land required to support mining activities. We expect to complete the review during the second half of the year, and

should there be any further changes to the life of mine we will update the market in due course on any impact that it may have

on the future carrying value. Refer to note 7 of the consolidated financial information for more detail.

Bulyanhulu

Given the flexibility provided by Bulyanhulu‟s high grade and long life reserve base and the fact that it is relatively less

exposed to a decline in the gold price, a review of the mine plan was not considered necessary and as such we have not been

required to test the asset for impairment. The current carrying value of Bulyanhulu is US$1,052.2 million. As part of the


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Operational Review we are progressing a review of the mine plan in order to optimise the value of this asset and when

complete we will announce any changes together with their associated impact.

Tulawaka

As part of the closure process we have impaired US$16.7 million of inventory from the mine, as there is no other reasonable

use for these supplies. The remaining Tulawaka book value of US$1.1 million will be recovered through usage over the

closure period.

Exploration - Nyanzaga project

Since the acquisition of the remaining 49% interest in the Nyanzaga project which we did not already hold in April 2010, we

have invested in the development of the mineral resource, which culminated in the update of the in-pit resource to in excess of

4.6Moz in January 2012, a fourfold increase from the resource at acquisition.

Given the gold price outlook, and the initial results from the pre-feasibility work, we have decided to focus on further desktop

analysis in order to continue to improve our understanding of the structural controls of the mineralisation and ultimately to see

if we can develop the mine with lower upfront capital expenditures and an improved grade profile. As a result, we have

reviewed the carrying value of the asset and have recorded a post-tax impairment of US$39.2 million at 30 June 2013.

Following the impairment, Nyanzaga‟s carrying value is now US$46.0 million.

Tulawaka Closure Process

Following the end of mining operations in Q1 2013 we have continued to progress the clean-up of the mine site ahead of formal

commencement of closure activities. During the quarter we completed the stripping of all underground equipment from the

mine, progressed the pit clearing, commenced the decommissioning of the process plant and completed the levelling of the

Run-of-Mine (“ROM”) pad. We recovered 1,294 ounces from the clean-up of the ROM pad and the tanks in the process plant.

We remain in discussions with the Tanzanian government, with regards to the ultimate end use of the mine site and will

update the market in due course on any developments.

All-in sustaining costs disclosure

In July the World Gold Council issued guidance regarding cost reporting, and introduced a new metric “All-in Sustaining Cost”

(“AISC”) which is designed to provide further transparency into the costs associated with gold mining and incorporate all costs

associated with sustainable production. Whilst the guidance is not mandatory, ABG has decided to adopt the AISC metric in

our reporting to ensure that we maintain the highest levels of transparency. We will continue to report cash costs in order to

provide comparability to prior periods.

All-in Sustaining Cost is calculated as: Cash Costs (which include royalties) + Corporate Social Responsibility expenses +

Corporate G&A costs + Reclamation & remediation (operating mines) + Mine exploration and study costs (sustaining

portions) + Capitalised stripping & underground mine development + sustaining capital expenditures.

For the second quarter our AISC was US$1,416 per ounce (US$1,404 excluding Tulawaka) which was down 8% on the prior

year period. Year to date our AISC is US$1,507 per ounce (US$1,483 excluding Tulawaka) which is up 3% on the first six

months of 2012. One of the key objectives of our Operational Review and life of mine optimisation has been to substantially

reduce our AISC per ounce by structurally reducing our cost base at the same time as ensuring that our ongoing mine plans

consistently deliver positive cash flow in the current lower gold price environment.

Board changes

During the six months ended 30 June 2013, Kelvin Dushnisky was appointed as Chairman of the Board of Directors with Peter

Tomsett and Graham Clow also joining the Board of Directors as Independent Non-Executive Directors. During the period both

Kevin Jennings and Derek Pannell stepped down from the Board of Directors in order to pursue other interests.

Mr Dushnisky is currently Senior Executive Vice President of Barrick Gold Corporation and is a key member of Barrick‟s senior

management team. He has more than 25 years of experience in broad-ranging roles across the mining industry and has had a

a close association with ABG‟s assets and business for nearly two decades. Mr Tomsett, who has taken the position as Senior

Independent Director of ABG, has a wide range of technical, operational and senior management experience in the mining

industry. He spent 20 years with Placer Dome Inc. in a number of senior roles, culminating in serving as President and Chief

Executive Officer until its acquisition in 2006. Mr Clow is currently Chairman and Principal Mining Engineer of RPA Inc. He is a

senior mining executive with 40 years experience in all aspects of acquisitions, exploration, feasibility, finance, development,

construction, operations, and closure.

Following these appointments, the ABG Board comprises ten members, including six Independent Non-Executive Directors,

one Executive Director and three nominees from Barrick Gold Corporation.


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Indirect Taxation

As previously announced our working capital position is currently being negatively impacted by the Tanzanian government‟s

abolishment of VAT relief in Q4 2012, in contravention of our Mineral Development Agreements. The abolishment of VAT relief

has led to an indirect tax receivable build up of US$75 million over the past 9 months, and it continues to accrue at US$7-8

million per month. We have been in discussions with the Government and have come to an agreement on setting up an

escrow account for VAT on imports which is anticipated to reduce the level of outflows going forward and we will also seek to

recover the amounts already accrued. We are continuing to negotiate on solutions in respect of VAT on local goods and

services.

Interim dividend

The Directors are pleased to announce the approval of an interim dividend for 2013 of US1.0 cent per share. This

demonstrates our commitment to capital returns to shareholders and also represents a sign of our confidence that we will be

able to generate significant cost savings from the Operational Review and return the business to positive free cash generation.

The interim dividend will be paid on 23 September 2013 to holders on record at 30 August 2013. The ex-dividend date will be

28 August 2013. ABG will declare the interim dividend in US dollars. Unless a shareholder elects to receive dividends in US

dollars, they will be paid in pounds sterling with the US dollar interim dividend being converted into pounds sterling at

exchange rates prevailing at the relevant time. The last date for receipt of currency elections will be 2 September 2013. The

exchange rate conversion for the interim dividend will be made on or around 5 September 2013.

Outlook

Over the past six months we have delivered strong performance from our operating portfolio and we remain confident in the

outlook for the remainder of the year. The drop in the gold price has necessitated changes to long term planning, but on the

basis of those changes together with our cost reduction initiatives, we are well placed to deliver solid returns even in a lower

gold price environment.

As a result guidance for the year remains unchanged and we continue to target the upper end of the production range of

540,000 – 600,000 ounces of gold at a total cash cost of between US$925 - US$975 per ounce sold.

With the changes to the sequencing of mine plans we expect to see a reduction in capitalised stripping and due to the deferral

of projects we will also reduce our planned expenditure on expansionary project studies, bringing our total capital expenditure

for the year down to US$425 million.


9 LSE: ABG

For further information, please visit our website: www.africanbarrickgold.com or contact:

African Barrick Gold plc +44 (0) 207 129 7150

Greg Hawkins, Chief Executive Officer

Andrew Wray, Head of Corporate Development & Investor Relations

Giles Blackham, Investor Relations Manager

RLM Finsbury +44 (0) 207 251 3801

Faeth Birch / Charles Chichester

About ABG

ABG is Tanzania‟s largest gold producer and one of the five largest gold producers in Africa. We have three producing mines,

all located in Northwest Tanzania, and several exploration projects at various stages of development in Tanzania and Kenya.

We have a high-quality asset base, solid growth opportunities and a clear strategy of optimising, expanding and growing our

business.

Maintaining our licence to operate through acting responsibly in relation to our people, the environment and the communities in

which we operate is central to achieving our objectives.

ABG is a UK public company with its headquarters in London. We are listed on the Main Market of the London Stock

Exchange under the symbol ABG and have a secondary listing on the Dar es Salaam Stock Exchange. Historically and prior to

our initial public offering (IPO), our operations comprised the Tanzanian gold mining business of Barrick Gold Corporation, our

majority shareholder. ABG reports in US dollars in accordance with IFRS as adopted by the European Union, unless otherwise

stated in this report.

Conference call

A presentation and conference call will be held for analysts and investors on 30 July 2013 at 09:30 BST with the dial-in details as follows:

Participant dial in: +44 (0) 203 003 2666 / +1 866 843 4608

Password: ABG

There will be a replay facility available until 6 August 2013. Access details are as follows:

Replay number: +44 (0) 208 196 1998

Replay PIN: 1074572#

In addition, there will be a conference call for analysts and investors based in North America at 13.30 BST, with access details

as follows:

Participant dial in: +44 (0) 203 003 2666 / +1 866 843 4608

Password: ABG

There will be a replay facility available until 6 August 2013. Access details are as follows:

Replay number: +44 (0) 208 196 1998

Replay PIN: 6653642#

FORWARD- LOOKING STATEMENTS

This report and the information contained herein is for information purposes only and does not constitute an invitation or offer to underwrite, subscribe for or otherwise acquire or dispose of any securities of ABG in any jurisdiction. 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 and information regarding plans, objectives and expectations with respect to future production, projects, operations, costs, products, services and the Operational Review, and statements regarding future performance. Forward-looking statements are generally identified by the words “plans”, “expects”, “anticipates”, “believes”, “intends”, “estimates”, “will” 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 ABG, 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 ABG include, but are not limited to, changes or developments in political, economic or business conditions in countries in which ABG conducts or may in the future conduct business, industry trends and developments, competition, fluctuations in the spot and forward price of gold and copper or certain other commodities (such as diesel fuel and electricity), changes in national or local legislation or regulation, currency fluctuations (including the US dollar, South African rand, Kenyan shilling and Tanzanian shilling exchange rates), ABG’s ability to successfully integrate acquisitions, ABG’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, ABG’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 ABG’s business strategy including, without limitation, ABG’s ability to implement the Operational Review successfully, 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 generally. Although ABG’s management believes that the expectations reflected in such forward-looking statements are reasonable, ABG cannot give assurances that such statements will prove to be correct. Accordingly, investors should not place reliance on forward-looking statements contained in this report. Any forward-looking statements in this report only reflect information available at the time of preparation. Subject to the requirements of the Disclosure and Transparency Rules and the Listing Rules or applicable law, ABG 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 or future events or changes in expectations or circumstances after the date of this report 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 ABG’s profits or earnings per share for any future period will necessarily match or exceed the historical published profits or earnings per share of ABG.

http://www.africanbarrickgold.com/


10 LSE: ABG

LSE: ABG

TABLE OF CONTENTS

Interim Operating Review

11

Exploration and Development Update

15

Financial Update

18

Non-IFRS measures

25

Principle Risks and Uncertainties

27

Statement of Directors‟ Responsibility

28

Auditors‟ Review Report

29

Consolidated Income Statement and Consolidated Statement of Comprehensive Income

30

Consolidated Balance Sheet

31

Consolidated Statement of Changes in Equity

32

Consolidated Statement of Cash Flows

33

Notes to the consolidated interim financial information

34


11 LSE: ABG

Interim Operating review

Bulyanhulu

Key statistics




2013 2012

Underground ore tonnes hoisted Kt 246 256

418 506

Ore milled Kt 243 286

414 532

Head grade g/t 7.8 8.4

7.7 8.5

Mill recovery % 90.7% 90.4%

91.0% 90.8%

Ounces produced oz 54,938 69,750

92,974 131,586

Ounces sold oz 54,386 71,201

87,802 133,417

Cash cost per ounce sold US$/oz 936 699

1,033 700 All-in sustaining cost per ounce sold US$/oz 1,375 1,011

1,581 1,050

Cash cost per tonne milled US$/t 210 174

219 176

Copper production Klbs 1,382 1,851

2,238 3,482

Copper sold Klbs 1,167 1,808

2,035 3,253

Capital expenditure US$(„000) 42,610 21,424

82,861 40,239

- Sustaining capital US$(„000) 7,951 8,412

15,546 15,059

- Capitalised development US$(„000) 11,822 9,440 24,102 22,126

- Expansionary capital US$(„000) 29,679 703 52,421 1,168

49,452 18,555 92,069 38,353 - Non-cash reclamation asset

adjustments US$(„000) (6,842) 2,869 (9,208) 1,886

Operating performance

Bulyanhulu continued to make progress against the recovery plan and produced 54,938 ounces during the quarter, 44% up on

Q1 2013, and down 21% on the prior year period. As expected, we saw some ongoing impact from staffing shortages and the

follow on impact of the Q1 production winder downtime in the early part of Q2, with production run rates improving as we

moved through the quarter. Grade remained below plan due to the previously announced delays to paste-fill delivery which

had a negative impact on underground development and mine sequencing.

During the quarter we returned the workforce to normal levels and continued to add paste fill capacity by completing the drilling

of further paste holes and by improving paste plant performance. As a result, we began to see improved access to high grade

stopes towards the end of the period and expect to see a further improvement during the course of H2 2013, albeit with some

variability as a result of the areas being mined.

Copper production for the quarter of 1.4 million pounds was 25% lower than that of the same period in 2012, primarily due to a

lower copper grade and lower throughput.

Cash costs per ounce sold for the quarter of US$936 were 34% higher than the prior year of US$699, driven by a lower

production base and resultant lower co-product revenue. AISC per ounce sold was 36% above the prior year period at

US$1,375 per ounce as a result of the increased cash cost base, lower production levels and increased capitalised

development costs.

Cash costs per tonne milled increased to US$210 in Q2 2013 (US$174 in Q2 2012) as a result of the lower mill throughput.

Capital expenditure for the quarter of US$42.6 million was US$21.2 million higher than the prior year period (US$21.4 million)

as a result of the expansionary capital spend on the CIL Expansion project (US$23.3 million) and the Upper East project

(US$4.4 million). Included in capital expenditure is a negative non-cash reclamation adjustment of US$6.8 million.


12 LSE: ABG

Buzwagi

Key statistics



(Unaudited) 2013 2012#

2013

2012

#

Tonnes mined Kt 8,475 7,088

17,305 11,991

Ore tonnes mined Kt 801 1,189

1,501 2,108

Ore milled Kt 1,197 837

2,290 1,765


1.3 1.5


88.2% 83.9%


85,746 70,731


96,367 71,249

Cash cost per ounce sold

US$/oz 1,054 1,183

918 1,129 All-in sustaining cost per ounce sold US$/oz 1,632 1,872

1,643 1,709


39 46

Copper production Klbs 1,740 1,270

3,346 2,644

Copper sold Klbs 1,589 1,636

4,078 2,707

Capital expenditure* US$(„000) 16,168 20,986

55,186 36,525


20,657 21,832

- Capitalised development US$(„000) 17,427 4,107

41,338 12,696

21,939 18,843

61,995 34,528

- Non-cash reclamation asset adjustments US$(„000) (5,771) 2,143

(6,809) 1,997

#Restated for the impact of capitalised stripping due to the adoption of IFRIC 20.


We saw another strong operating performance at Buzwagi as the mine moved a record amount of material, and the mill

operated above the nameplate capacity. With total ore tonnes below the plant capacity, we supplemented mined ore with

lower grade stockpiles resulting in a grade of 1.4 g/t. In spite of the lower grade, we saw recoveries increase by 2% which

together with the increased throughput drove production 33% higher than the previous period at 45,726 ounces. Gold ounces

sold during the quarter trailed production by 3% due to the timing of production and shipments leaving site, but were 12%

higher than production on a year to date basis.

Improvements in the availability and utilisation of the mobile fleet, a continued focus on waste removal and commissioning of

an additional shovel increasing waste mining capacity, resulted in total tonnes mined increasing by 20% over the prior year

period. Due to the sequencing of the mine plan, ore tonnes mined of 800,549 tonnes were 33% lower than in 2012. With

improved plant availability and efficiencies, mill throughput was ahead of nameplate capacity resulting in an increase of 43% in

tonnes milled compared to Q2 2012. As planned, the mill continues to operate largely on self generated power in order to

mitigate the instability of grid power.

Copper production for the quarter of 1.7 million pounds was 37% above the prior year‟s production. This was primarily due to

the increased throughput.

Cash costs for the quarter were US$1,054 per ounce sold compared to US$1,183 in 2012. Cash costs have been positively

affected by the increased production base, increased capitalised stripping and a reduction in labour costs due to a reduction in

international employees. AISC per ounce sold was 13% below the prior year period, but remains above spot gold prices. Cash

cost per tonne milled of US$39 was 28% below that costs for the same period in 2012 due to increased throughput, combined

with lower direct mining costs.

We have re-engineered the mine plan at Buzwagi which will significantly reduce the AISC of the mine and enable positive free

cash generation over the new life of mine. The LOM has been reduced to six and a half years and will result in the movement

of 7-8Mt less of material on average for the next three and a half years which will substantially reduce our waste stripping

costs. We expect mill throughput to remain at nameplate capacity, with similar recoveries to H1 2013. Head grade is expected

to average 1.6-1.7 g/t over the next three and a half years, falling to approximately 1.0 g/t as we process stockpiles. The

impact of the shortened mine life will result in the production of around 1.1 million ounces over the LOM which will result in the

remaining reserves being a reclassified to resources.

Capital expenditure for the quarter of US$16.2 million was 23% lower than the prior year period, with increased capitalised

stripping (US$17.4 million) more than offset by a reduction in sustaining capital expenditure and a negative non-cash

reclamation adjustment of US$5.8 million.


13 LSE: ABG

North Mara

Key statistics




2013

2012

#

Tonnes mined Kt 6,420 4,461

11,395 8,852

Ore tonnes mined Kt 681 374

1,458 879

Ore milled Kt 634 677

1,280 1,337


3.6 2.2


87.1% 81.1%


128,478 76,876


130,200 79,600

Cash cost per ounce sold

US$/oz 684 990

739 982 All-in sustaining cost per ounce sold US$/oz 1,266 1,968

1,313 1,830


75 58

Capital expenditure*

US$(„000) 27,388 27,359

47,433 47,954


23,962 21,178

- Capitalised development US$(„000) 22,270 9,903 28,917 20,966

- Expansionary capital US$(„000) 376 1,985 504 4,557

31,830 25,258 53,383 46,701 - Non-cash reclamation asset adjustments US$(„000) (4,442) 2,101 (5,950) 1,253

# Restated for the impact of capitalised stripping due to the adoption of IFRIC 20.


North Mara continued its strong performance from Q1 2013, and delivered gold production of 63,774 ounces for the quarter,

an increase of 54% on 2012 driven by improved mine grade and recoveries. We continued to mine increased volumes of

higher grade ore due to changes to the mine plan as a result of positive reconciliation from grade control drilling. We expect to

see a reduction in the volume of higher grade ore and consequently in head grades during the second half of the year.

Gold ounces sold amounted to 71,150 ounces for the quarter, an increase of 71% from 2012, which included approximately

7,000 ounces on hand at the beginning of the quarter.

Head grade of 3.6 g/t increased by 57% from 2012, driven by increased ore mined from high grade areas in Gokona and a

reduction in mill feed from the lower grade stockpiles. Recoveries of 87.0% increased by 4% from the prior year period,

primarily as a result of the positive impact from the gold plant recovery project completed in 2012, and the increase in head

grade.

Total tonnes mined for the quarter amounted to 6.4 million tonnes, 44% higher than the same quarter in 2012. Ore tonnes

mined of 680,792 were 82% higher than 2012 as a result of the waste stripping programme undertaken in 2012 opening higher

grade ore areas in Gokona Stage 2 and changes to the mine plan as a result of the grade control model.

Throughput was 6% lower than the prior year period as a result of plant downtime due to operational issues and maintenance

work performed.

Cash costs were US$684 per ounce sold compared to US$990 in the prior year period. The decrease in cash costs per ounce

was driven by the increased production base and increased capitalised stripping. AISC per ounce was 36% lower than the

prior year period as a result of the lower cash costs and the increase in ounces produced.

On a per tonne basis, reduced throughput, together with increased energy and fuel costs, maintenance costs and

consumables usage due to the increased mining activity led to an increase of 26% in cash cost per tonne milled.

Capital expenditure for the quarter of US$27.4 million was in line with the prior year. Key capital expenditure included

capitalised stripping (US$22.3 million) and investments in mine equipment, tailings and infrastructure (US$4.3 million).

Included in capital expenditures is a negative non-cash reclamation adjustment of US$4.4 million.

Land acquisition at North Mara remains a key issue and continues to be a priority focus for management. The Government

task force has been progressing the valuation of land required for future mining activities and will commence the acquisition of

these areas in Q3 2013.

We continue to make progress on meeting the final conditions for the lifting of the Environmental Protection Order (“EPO”) at

North Mara and will provide further updates in due course.


14 LSE: ABG

Tulawaka

Key statistics (70%)




2013 2012

Underground ore tonnes hoisted Kt - 29

24 59

Open pit ore tonnes mined Kt - -

- 43

Open pit waste tonnes mined Kt - -

- 222

Ore milled Kt 31 41

65 108


2.2 5.6


99.0% 95.6%


4,640 18,550


5,565 18,375

Cash cost per ounce sold US$/oz 2,723 1,305

2,442 1,046 All-in sustaining cost per ounce sold US$/oz 2,643 2,069

2,808 1,467


210 178

Capital expenditure (100%) US$(„000) (101) 4,442

422 9,564

- Sustaining capital US$(„000) 94 3,813

583 4,700

- Capitalised development US$(„000) - 1,226 - 3,605

- Expansionary capital US$(„000) - - - 1,861

94 5,039 583 10,166 - Non-cash reclamation asset

adjustments US$(„000) (195) (597) (161) (602)


Following the end of mining operations in Q1 2013 we have continued to progress the clean-up of the mine site ahead of formal

commencement of closure activities. During the quarter we completed the stripping of all underground equipment from the

mine, progressed the pit clearing, commenced the decommissioning of the process plant and completed the levelling of the

ROM pad.

Mill throughput resulted from the processing of the materials from the clean-up of the ROM pad which, together with the clean-

up of the process plant tanks, led to the recovery of 1,294 ounces. Final clean-up of the plant has started, and we expect that

any incidental production from the closing of the mine will be completed during Q3 2013.

We have submitted the Mine Closure Plan to the relevant government departments and remain in discussions with the

Tanzanian government, with regards to the ultimate end use of the mine site.

As part of the closure process we have impaired US$16.7 million of inventory from the mine, as there is no other reasonable

use for these supplies. The carrying value of all assets at Tulawaka is now US$1.1 million and will be recovered from usage

over the closure period.


15 LSE: ABG

Exploration and Development Update

As previously announced as part of the Operational Review we have scaled back our exploration and evaluation budget for

2013 to US$21 million, which is a reduction of 54% from US$46 million in 2012. The majority of work this year is based around

deep drilling at Bulyanhulu and targeted greenfields exploration in both Kenya and at Dett-Ochuna and Tagota in Tanzania.

Furthermore, due to the gold price environment we have decided to temporarily defer all expansionary capital projects other

than the ongoing construction of the expansion of the CIL Circuit at Bulyanhulu. This measure will help to preserve cash and

ensure optionality as we move through and implement the Operational Review.

Whilst this means we will not be proceeding immediately with the Upper East Project at Bulyanhulu, we will incorporate the

project into the review of the life of mine as part of the Operational Review as we ultimately decide how best to proceed with

the future development of our flagship asset. At North Mara the review of the life of mine continues and will be guided by our

overall assessment of the availability of the land necessary to implement the plan. The underground potential identified so far

at North Mara will be incorporated as appropriate into the scenario planning for the mine. Desktop work will continue at

Nyanzaga in order to continue to improve our understanding of the structural controls of the mineralisation and ultimately to

see if we can develop the mine with lower upfront capital expenditures.

Bulyanhulu CIL Expansion Project

The Bulyanhulu CIL Expansion project continues to progress well and is now over 50% complete. The project remains on track

for first production in Q1 2014 and we remain on budget, with US$71.8 million spent to date on the project, of which US$45.7

million was incurred in the first half of 2013. The project is funded by a US$142 million debt facility of which US$80 million has

been drawn down to date.

During the second quarter the focus was on the completion of the earthworks and the commencement of the construction of

the leach tanks.

The key focus for the coming quarter is to accelerate the civil construction and the fabrication programmes to ensure that

critical path items are delivered to the site on time and the plant is commissioned during Q1 2014. The first phase of

construction of the new Tailing Storage Facility, in order to hold the expanded CIL tailings, is expected to commence in Q3

2013.

Exploration

Tanzania

Dett-Ochuna Project

Dett-Ochuna is a large gold system hosted in granitic and sedimentary rocks located approximately 45 kilometres west of North

Mara. Historic drilling programmes intersected very wide zones of low grade mineralisation (0.6-0.9g/t gold) extending from

surface to depths greater than 300 metres. The current drilling programmes are targeting higher grades zones within this

anomalous gold system. Phase 1 follow-up drilling was completed during February 2013 with encouraging results received

from discrete higher grade zones (>1.5g/t gold) that justified additional drilling on the project.

Previously announced, selected significant results included:

DTD0009 - 62m @ 1.15g/t Au from 66m, including 29m @ 1.85g/t Au from 79m







Phase 2 follow-up drilling consists of an additional seven drill holes. At the end of H1 2013, six of the seven holes had been

completed for a total of 2,023 metres bringing the H1 2013 total to 3,407 metres. The aim of this phase of drilling was to

investigate controls on the higher grade mineralisation, as well as testing the dip and strike extensions of the >1g/t Au

mineralised domains.

At the end of June 2013, results for five holes had been received with selected significant results including:

DTD0025 – 78m @ 1.60g/t Au from 163m, including 48m @ 2.29g/t Au from 193m

DTRCD0142 - 52m @ 1.05g/t Au from 174m, including 23m @ 1.45g/t Au from 203m

DTRCD0143 - 45m @ 1.25g/t Au from 244m, including 18m @ 1.71g/t Au from 244m


16 LSE: ABG

Figure – Dett-Ochuna drill hole location plan with selected significant assays and approximate trend of gold zones

In addition to positive drill results for H1 2013, preliminary metallurgical test work was carried out by ALS Ammtec in Perth and

returned encouraging results. Two composite samples obtained from purpose drilled HQ diamond core holes, DTDM0021 and

DTDM0022, were submitted to ALS Ammtec for gravity / leach test work. All samples were of primary (not oxidised)

mineralisation. Leach tests were carried out in bottle with roll agitation, and were carried out on -150, -106, -75 and -53µm

(micron) grinds. As expected, the -75µm grind produced optimal results including:

Sample #1 returned a calculated head grade of 2.47g/t Au, gravity recovery of 58.2% Au, 24hr NaCN leach of 93.5% Au and tail grade of 0.16g/t Au, and

Sample #2 returned a calculated head grade of 1.35g/t Au, gravity recovery 24.9% Au, 24hrs NaCN leach of 88.8% Au and tail grade of 0.16g/t Au.

Recovery for Samples 1 and 2 after two hours were 87.4% Au and 81.2% Au respectively, indicating that the bulk of the

leachable gold is liberated very quickly. Further test work is ongoing and will include heap leach test work on low grade

material.

Geology and mineralisation models are currently being interpreted and compiled in order to complete a preliminary global

resource estimate and decide on future targeting and drilling.

Tagota Project

At the Tagota Project, approximately 35km northwest of the Gokona open pit, eight reverse circulation (“RC”) drill holes were

completed for 1,078 metres targeting gold mineralisation in basement rocks beneath younger volcanic cover rocks (phonolite).

The target is a large circular magnetic feature interpreted to be a 2.5km x 2.5km intrusive complex with artisanal mines around

the exposed outer perimeter, and thought to be a similar setting to the Dett-Ochuna gold system. Drilling encountered the

anticipated geology, being predominantly an altered felsic-to-intermediate intrusion (syenite) with disseminated sulphides and

interpreted stock-work style quartz veining. Results have been received for all eight drill holes with better intersections

including:

TGRC0006: 63m @ 1.01g/t Au from 44m, and TGRC0007: 34m @ 1.08g/t Au from 81m


17 LSE: ABG

Figure – Tagota interpreted geology and drill hole location plan showing location of recent reverse circulation drill holes

Given the limited number of holes, the very broad spaced nature of the drilling, and the fact we were targeting beneath 10-60

metres of phonolite cover these results are very encouraging. We plan to complete several follow-up diamond core holes

adjacent to the anomalous RC holes to investigate the geometry and continuity of the gold system to allow for planning of

future drill programmes.

Kenya

West Kenya JV Project

Exploration programmes in Kenya during H1 2013 focused on target generation, mapping, soil sampling and rock chip

sampling across selected regional prospects in order to delineate and validate targets for follow up programmes. During the

quarter a total of 2,545 soil samples were collected across the Kakamega Dome and Lake Zone gold camps on broad (400

metre and 800 metre) spaced grids, and fourteen gold-in-soil anomalies greater than 1km in strike were identified for infill

sampling. Additionally, several preliminary diamond core holes were completed on the Ramula, Bushiangala and Rosterman

prospects targeting extensions to known mineralisation and structural controls.

At the Ramula Project diamond core drilling during H1 2013 targeted a gold system consisting of multiple stacked, narrow,

shallow-dipping, high-grade quartz veins within an intrusive body (interpreted to be a diorite intrusion/plug) previously identified

by diamond core drilling in late 2012. The current phase of drilling intersected the interpreted extensions of quartz reefs and

modeling of the significant gold zones is currently underway to assess the potential of the Ramula system before further dril ling

is undertaken.

Selected significant results from the drill programme during H1 2013 included:

ANRDD009: 2m @ 7.34g/t Au from 88m and 2m @ 89.7g/t Au from 126m

ANRDD010: 3m @ 5.6g/t Au from 125m and 3m @ 4.03gt/ Au from 221m

ANRDD011: 2.3m @ 7.96g/t Au from 167m

Results for the Bushiangala and Rosterman diamond core holes were awaited at the end of H1 2013.

Aircore drilling to test existing soil anomalies throughout the Kakamega Dome and Lake Zone gold camps is expected to

commence in August 2013, with a total of 25,000 - 32,000 metres planned by the end of the year utilising two drill rigs. The aim

of these programmes is to establish camp-scale targets for more advanced stage reverse circulation and diamond core drill

testing in 2014.


18 LSE: ABG

Financial Update

The following review provides an analysis of our consolidated results for the six months ended 30 June 2013 and the main

factors affecting financial performance. It should be read in conjunction with the financial information and accompanying notes

on pages 30 to 51, which have been prepared in accordance with International Financial Reporting Standards as adopted for

use in the European Union (“IFRS”). Prior year comparative financial information has been restated for the impact of

capitalised stripping due to the adoption of IFRIC 20, „Stripping costs in the production phase of a surface mine‟. Refer to note

5 of the consolidated financial information for further details.

Revenue

Revenue for the half year of US$499.8 million was 6% lower than the prior year period of US$534.5 million. Despite the fact

that attributable gold sales volumes of 319,934 ounces were 6% higher than the prior year, gold revenue was negatively

impacted by a 10% decrease in the average realised price. The increase in sales ounces was primarily due to the increased

production base at Buzwagi and North Mara, and concentrate shipments which were delayed at the end of H1 2012. The

average realised gold price was US$1,480 per ounce in H1 2013 compared to US$1,642 per ounce in H1 2012.

Co-product revenue amounted to US$22.7 million for the year and decreased by 7% from the prior year (US$24.5 million).

Copper sales volumes increased by 3% mainly due to increased production at Buzwagi, but was offset by a 9% decrease in

copper prices. The H1 2013 average realised copper price amounted to US$3.23 per pound compared to the prior year period

of US$3.53 per pound.

Cost of sales

Cost of sales was US$414.9 million for the half year ended 30 June 2013, representing an increase of 11% on the prior year

period (US$374.7 million). The key aspects impacting the cost of sales during the year were:

‒ Increased direct mining costs as a result of increased mining and processing activities at North Mara and Buzwagi, with 34% more tonnes mined across the group and an 8% increase in tonnes milled;

‒ Overall labour cost inflation offset by a reduction in the number of international employees; ‒ Increased depreciation due to increased production and the increased asset base employed and depreciated; and ‒ Increased royalty costs given an increase in government royalty rates from 3% to 4% in May 2012.

The table below provides a breakdown of cost of sales:

(US$‟000) Three months ended

30 June



2013 2012

#

Cost of Sales

Direct mining costs 147,701 144,201

287,006 274,882

Third party smelting and refining fees 3,658 5,729

8,156 9,663

Royalty expense 10,986 10,329

22,345 19,423

Total cash costs before co-product revenue 162,345 160,259

317,507 303,968

Depreciation and amortisation 47,864 35,956

97,377 70,769

Total cost of sales 210,209 196,215

414,884 374,737 # Restated for the impact of capitalised stripping due to the adoption of IFRIC 20.

A detailed breakdown of direct mining expenses is shown in the table below:


30 June



2013 2012

#

Direct mining costs

Labour 41,688 41,939

87,371 87,764

Energy and fuel 36,644 33,843

72,524 67,975

Consumables 28,364 25,829

55,637 51,848

Maintenance 23,561 23,498

49,297 49,512

Contracted services 24,244 22,483

51,948 41,785

General administration costs 22,640 21,413

46,216 44,291

Capitalised mining costs (29,440) (24,804)

(75,987) (68,293)

Total direct mining costs 147,701 144,201

287,006 274,882



19 LSE: ABG

Individual cost components comprised:

- Labour costs were in line with H1 2012, despite the impact of an average 6% inflationary increase at the end of 2012,

mainly as a result of the focus on reducing the number of international workers at each of the mine sites;

- Energy and fuel expenses increased by 7% over H1 2012, driven primarily by increased fuel usage for self generation of power at Buzwagi and increased mining and processing activity at Buzwagi and mining activity at North Mara;

- Consumable costs increased by 7% primarily due to the increased mining and processing activity at Buzwagi and increased mining at North Mara, offset by a decrease at Bulyanhulu due to lower processing activity;

- Maintenance costs remained in line with H1 2012. Increased maintenance costs at North Mara due to the increased mining activity was offset by lower maintenance costs at Tulawaka due to the cessation of mining during H1 2013;

- Contracted services increased 24%, driven by increased maintenance and repairs contractors (“MARC”) charges at

Buzwagi as a result of the increased maintenance rates driven by increased mining activity, and increased contracted drilling and MARC costs at North Mara due to the increased mining activity. This was offset by a decrease in costs at Tulawaka as H1 2012 included contracted open pit mining services, combined with the cessation of mining activities in H1 2013;

- General and administrative costs increased 4%, driven by increased warehouse costs as the continued ageing of

inventory resulted in an increased inventory obsolescence provision and increased camp costs; and

- Capitalised direct mining costs which consists of capitalised development costs and the change in inventory charge, made up as follow:


30 June



2013 2012

#

Capitalised direct mining costs

Capitalised development costs (51,143) (25,897)

(93,247) (61,311)

Drawdown of/ (investment in) inventory 21,703 1,093

17,260 (6,982)

Total capitalised direct mining costs (29,440) (24,804)

(75,987) (68,293)


- Capitalised development costs were 52% higher than H12012 as Buzwagi and North Mara focused on the removal of waste in order to access higher grade zones. The drawdown in inventory was US$24.2 million higher than in H1 2012 due to the reduction in finished gold combined with the impact of higher cost of inventory in H1 2013 which was built up over the course of 2012.

Corporate administration costs

Corporate administration expenses totalled US$14.9 million for the six months ended 30 June 2013. This equated to a 40%

decrease from the prior year period of US$25.0 million. The decrease is predominantly due a decreased share based payment

expenses given the decline in share price and cost saving initiatives at all corporate offices including a reduction in headcount. Exploration and evaluation costs

For H1 2013, US$7.6 million was incurred, 27% lower than the US$10.4 million spent in H1 2012. The decrease reflects an

overall reduction in exploration spend and elimination of non critical spend on projects. The key focus areas for the year were

exploration drilling at North Mara (US$2.0 million) focusing on the Dett-Ochuna and Tagota projects, exploration programmes

at the West Kenya JV project (US$1.3 million), continued drilling at the Nyanzaga project (US$0.8 million) and Bulyanhulu

Upper East (US$0.3 million).

Corporate social responsibility expenses

Corporate social responsibility expenses incurred amounted to US$6.9 million for the year compared to the prior period of US$6.8 million. Of the total spend for 2013, US$2.6 million was spent on ABG Maendeleo Fund projects and US$1.8 million was spent on Village Benefit Implementation Agreements (“VBIA‟s”) at North Mara.


20 LSE: ABG

Other charges

Other charges amounted to US$22.1 million for the year, US$17.8 million higher than H1 2012 (US$4.3 million). The main

contributors to the charge were: (i) Tulawaka non-operational costs of US$4.7 million including costs of retrenchment, (ii)

residual expenses incurred as a part of the CNG offer process including advisor fees and workforce retention accruals totalling

US$2.8 million; (iii) costs relating to the Operational Review, including external services and retrenchment costs of US$1.6

million, (iv) disallowed indirect tax claims and other indirect tax related expenses of US$3.8 million as part of the continued

reconciliation process with the TRA and retrospective legislation changes; (v) legal costs of US$1.0 million; (vi) ABG‟s entry

into zero cost collar contracts as part of a programme to protect it against copper, silver, rand and fuel cost market volati lity,

and due to the fact that these do not qualify for hedge accounting, resulted in a combined mark-to-market revaluation loss of

US$4.8 million mainly due to the devaluation of the Rand; and (vii) discounting adjustments of long term indirect taxes of

US$1.4 million. The impact of the hedge loss above was partially offset by cost savings on certain cost elements due to a

weaker Rand. Refer to note 8 of the consolidated financial information.

Finance expense and income

Finance expense of US$4.8 million was slightly lower than US$5.3 million in 2012. The key components were: US$1.5 million

(US$1.5 million in 2012) relating to commitment fees for the US$150 million undrawn revolving credit facility and increased

accretion expenses relating to the discounting of the environmental reclamation liability. Other costs include bank charges and

interest paid on the factoring of concentrate receivables and finance leases. Interest costs relating to the project financing on

the CIL project are capitalised to the asset.

Finance income relates predominantly to interest charged on non-current receivables and interest received on money market

funds. Refer to note 9 of the consolidated financial information for details.

Taxation matters

The taxation credit increased to US$184.6 million for the year, compared to a charge of US$35.0 million in H1 2012. The H1

2013 credit consists predominantly of deferred tax. The increased tax credit was driven by the tax impact of impairment

charges of US$201.0 million, as discussed above. This was partially offset by net deferred tax charges of US$16.4 million. The

effective tax rate in 2013 amounted to 20.6% compared to 32% in 2012. The decrease is mainly driven by temporary

differences (including tax losses) of US$73.5 million for which no deferred income tax assets were recognised primarily

relating to: Buzwagi, Tulawaka, ABG Exploration Ltd and ABG Plc stand alone assessed losses. Net loss for the period

As a result of the factors discussed above, the net loss for the six months ended 30 June 2013 was US$701.2 million against

the prior year period profit of US$73.7 million. Decreased revenue and increased depreciation, impairment and other charges

as explained above contributed to the variance. This was offset by lower corporate administration and exploration and

evaluation costs. Adjusted earnings, after excluding impairment and other one-off type charges, amounted to US$39.3 million,

47% lower than the prior year period. Loss per share

The loss per share for the six months ended 30 June 2013 amounted to US171.0 cents, a decrease of US189.0 cents from the

prior year period earnings of US18.0 cents. The decrease was driven by an increased net loss with no change in the

underlying issued shares. Adjusted earnings per share, after excluding impairment and other one-off type charges, of US9.6

cents were 47% below the prior year period.

Key financial performance indicators and reconciliations

Cash costs

With respect to our cash costs per ounce sold in the six months ended 30 June 2013, we saw a 1% increase from the

comparable period in 2012 to US$903 per ounce sold from US$896 per ounce sold. Refer to the current operations overview

on page 2 and cost of sales explanations as part of the financial review detailing the year on year change.

The table below provides a reconciliation between cost of sales and total cash cost to calculate the cash cost per ounce sold.


21 LSE: ABG


30 June

Six months ended ended 30 June


2013 2012

#

Total cost of sales 210,209 196,215

414,884 374,737

Deduct: Depreciation and amortisation (47,864) (35,956)

(97,377) (70,769)

Deduct: Co-product revenue (9,548) (12,270)

(22,697) (24,501)

Total cash cost 152,797 147,989

294,810 279,467

Total ounces sold1 172,392 160,029

322,319 310,516

Consolidated cash cost per ounce 886 925

915 900

Equity ounce adjustment2 (7) (7)

(12) (4)

Attributable cash cost per ounce 879 918

903 896

# Restated for the impact of capitalised stripping due to the adoption of IFRIC 20. 1Reflects 100% of ounces sold.

2Reflects the adjustment for non-controlling interests at Tulawaka.

Refer to the segment note in note 6 to the consolidated financial information for a reconciliation to all-in sustaining costs per

ounce sold.

EBITDA

EBITDA for the six months ended 30 June 2013 decreased by 29% to US$130.8 million compared to the prior year period of

US$184.1 million as a result of the lower revenue base, increased direct mining costs mainly at Buzwagi and North Mara and

increased royalty costs. Note that EBITDA includes the impact of other charges totalling US$22.1 million which includes one-

off expenditures. A reconciliation between net profit for the period and EBITDA is presented below:

(US$‟000)

Three months ended

Six months ended

30 June

30 June

(Unaudited) 2013 2012# 2013 2012

#

Net (loss)/profit for the period (729,627) 32,554

(713,418) 74,079

Plus tax (credit)/expense (198,906) 16,301

(184,648) 35,022

Plus depreciation and amortisation 47,864 35,956

97,377 70,769

Plus impairment charges 927,690 -

927,690 -

Plus finance expense 2,218 2,737

4,775 5,313

Less finance income (410) (813)

(1,005) (1,079)

EBITDA 48,829 86,735

130,771 184,104


Adjusted net earnings In H1 2013, we have calculated adjusted net earnings by excluding one-off costs or credits relating to non-routine transactions from net profit attributed to owners of the parent.


22 LSE: ABG

Adjusted net earnings and adjusted earnings per share have been calculated by excluding the following:

(US$'000) Three months ended

30 June



2013 2012

#

Net (loss)/ earnings (721,944) 33,361 (701,230) 73,709

Adjusted for:

Impairment charges 927,690 - 927,690 -

Costs associated with the Operational Review 1,610 - 1,629 - Tulawaka non-operational costs, including de-recognition of deferred tax 7,640 - 12,208 -

CNG related costs/ retention bonuses 1,120 - 2,812 -

Discounting of indirect taxes 1,375 - 1,375 -

Tax and minority interest impact of the above (204,786) - (205,150) -

Adjusted net earnings 12,705 33,361 39,334 73,709


Adjusted net earnings per share for the six months ended 30 June 2013 amounted to US9.6 cents compared to US18.0 cents in H1 2012.

Financial position

ABG had cash and cash equivalents of US$320.9 million at 30 June 2013 (US$401.3 million at 31 December 2012). The

Group‟s cash and cash equivalents are held 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 and cash and cash equivalents in other foreign currencies are maintained for operational

requirements.

In January 2013 we concluded negotiations with a group of commercial banks (Standard Bank, Standard Chartered, and ABSA) for the provision of an export credit backed term loan facility ("Facility") for the amount of US$142 million. The Facility has been put in place to fund a substantial portion of the construction costs of the new CIL circuit at the process plant at Bulyanhulu ("Project"). The Facility is secured upon the Project, has a term of seven years and when drawn the spread over Libor will be 250 basis points. The Facility is repayable in equal instalments over the term of the Facility, after a two year repayment holiday period. The interest rate has been fixed at an effective rate of 3.6% through the use of an interest rate swap. The interest charged on the facility is capitalised to the project until the point where the CIL circuit is ready for its intended use. At 30 June 2013, US$80 million of the Facility has been drawn. The above complements the existing undrawn revolving credit facility of US$150 million which runs until November 2015.

Goodwill and intangible assets decreased by US$67.6 million from December 2012 due to impairment charges relating to

Nyanzaga and North Mara.

The net book value of property, plant and equipment decreased from US$2.0 billion in December 2012 to US$1.3 billion in H1

2013. The main capital expenditure drivers have been explained in the cash flow used in investing activities section below, and

have been offset by depreciation charges of US$90.4 million and pre tax impairment charges of US$783.5 million at Buzwagi

and North Mara. Refer to note 14 to the financial statements for detail.

Total indirect tax receivables, net of a discount provision applied to the non-current portion, increased from US$98.8 million at

31 December 2012 to US$140.6 million in 2013. The increase was mainly due to the impact of VAT relief abolishment in Q4

2012 resulting in a build-up of indirect tax receivables of about US$43.2 million. The net deferred tax position decreased from

a net deferred tax liability of US$172.7 million as at 31 December 2012 to a net deferred tax asset of US$11.8 million. This

was mainly driven by the reduction in deferred tax liabilities as a result of the impairments at North Mara, Buzwagi and

Tusker/Nyanzaga which decreased the net asset base. The tax effect on the tax losses carried forward is a reduction from

US$319.5 million as at 31 December 2012 to US$313.7 million. US$73.5 million of deferred tax assets were not recognised as

at 30 June 2013 of which US$59.4 million relates to Buzwagi as a result of the change in the life of mine which reduced future

profitability.

Net assets attributable to owners of the parent decreased from US$2.8 billion in December 2012 to US$2.0 billion in H1 2013.

The decrease reflects the current year loss attributable to owners of the parent of US$701.2 million and the payment of the

final 2012 dividend of US$50.4 million to shareholders during 2013.


23 LSE: ABG

Cash flow generation and capital management

Cash flow

(US$‟000)

Three months ended

Six months ended

30 June

30 June

(Unaudited) 2013 2012# 2013 2012

#

Cash flow from operating activities 41,691 62,345

99,017 127,102

Cash used in investing activities (102,943) (84,584)

(208,822) (147,886)

Cash (used in)/provided by financing activities (20,263) (56,273)

27,588 (60,767)

Decrease in cash (81,515) (78,512)

(82,217) (81,551)

Foreign exchange difference on cash 868 1,170

1,742 1,064

Opening cash balance 401,520 581,009

401,348 584,154

Closing cash balance 320,873 503,667

320,873 503,667


Cash flow from operating activities was US$99.0 million for the six months, a decrease of US$28.1 million from 2012. The

decrease primarily related to decreased EBITDA combined with an outflow associated with working capital of US$25.9 million.

The working capital movement related to: increased investment of US$43.2 million in indirect tax receivables due to legislation

changes in Q4 2012 removing VAT abolishment for the mining sector; and a decrease in related party payables of US$1.2

million due to repayments. This was offset by a decrease in inventories of US$17.6 million mainly due to the drawdown of gold

related inventory, and a decrease in trade receivables of US$7.0 million related to receivables from gold customers.

Cash flow used in investing activities was US$208.8 million for the six months. Total cash capital expenditure for the period of

US$207.2 million increased by 53% from the prior year figure of US$135.5 million driven by both increased expansionary and

capitalised development expenditure, slightly offset by lower sustaining capital expenditure (US$6.3 million).

A breakdown of total capital and other investing capital activities for the six months ended is provided below:

(US$‟000)

Six months ended

30 June


Sustaining capital 58,987 65,510

Expansionary capital 53,866 10,639

Capitalised development 94,357 59,393

Total cash capital 207,210 135,542

Non-cash rehabilitation asset adjustment (22,128) 4,534

Non-cash sustaining capital1 1,846 1,623

Total capital expenditure 186,928 141,699

Cash flow used in investing activities are made up as follow:

Total cash capital 207,210 135,542

Non-current asset movements2 1,612 12,344

Total cash flow used in investing activities 208,822 147,886

# Restated for the impact of capitalised stripping due to the adoption of IFRIC 20. 1 Total non-cash sustaining relates to the capital finance lease at Buzwagi for drill rigs in 2012 and also includes capital accruals excluded from cash sustaining capital.

2 Non-current asset movements relates to the investment in the land acquisitions reflected as prepaid operating leases and Tanzania government receivables, and also includes proceeds

from the sale of assets.

Sustaining capital

Sustaining capital expenditure included a focus on mine equipment renewal of US$31.8 million at the three main mine sites;

investment in tailings and infrastructure at Bulyanhulu (US$3.1 million), North Mara (US$7.7 million) and Buzwagi (US$7.5

million); and investment in the security wall at North Mara (US$2.4 million).

Expansionary capital

Expansionary capital expenditure consisted mainly of the Bulyanhulu CIL Expansion project (US$45.7 million) and capitalised

exploration and evaluation costs of US$5.0 million relating to Upper East resource definition drilling at Bulyanhulu and North

Mara capitalised drilling of US$0.5 million.


24 LSE: ABG

Capitalised development

Capitalised development includes capitalised stripping at North Mara (US$28.9 million) and Buzwagi (US$41.3 million) and

Bulyanhulu capitalised underground development of US$24.1 million.

Non-cash capital

Non-cash capital for the six months totalled a credit of US$20.3 million and consisted of negative reclamation asset

adjustments (US$22.1 million), and the impact of sustaining capital accruals (US$1.8 million). The reclamation adjustments

were driven by an increased discount rate due to the increase in the US risk free rate over the quarter, which resulted in an

overall lower discounted liability.

Other investing capital

During the six months North Mara incurred land purchases totalling US$6.1 million which was offset by a decrease in

government receivables (US$4.0 million).

Cash provided by financing activities for the six months ended 30 June 2013 was US$27.6 million, an increase on H1 2012

(US$60.8 million outflow). The inflow primarily relates to the drawdown on the Bulyanhulu CIL Expansion project debt facility of

US$80 million, offset by the payment of the 2012 final dividend of US$50.4 million and finance lease payment of US$2.0

million.

Dividend

An interim dividend of US1.0 cent per share was declared and will be paid to shareholders on 23 September 2013.

Significant judgements in applying accounting policies and key sources of estimation uncertainty

The preparation of interim financial information requires management to make judgements, estimates and assumptions that

affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual

results may differ from these estimates.

In preparing this condensed consolidated interim financial information, the significant judgements made by management in

applying the group‟s accounting policies and the key sources of estimation uncertainty were the same as those that applied to

the consolidated financial statements for the year ended 31 December 2012, with the exception of changes in estimates that

are required in determining the provision for income taxes (see Note 4 of the consolidated financial information).

Going concern statement

The ABG Group‟s business activities, together with factors likely to affect its future development, performance and position are

set out in the operational and financial review sections of this report. The financial position of the ABG Group, its cash flows,

liquidity position and borrowing facilities are described in the preceding paragraphs of this financial review.

In assessing the ABG Group‟s going concern status the Directors have taken into account the above factors, including the

financial position of the ABG Group and in particular its significant cash position, the current gold and copper price and market

expectations for the same in the medium term, and the ABG Group‟s capital expenditure and financing plans. After making

appropriate enquiries, the Directors consider that ABG and the ABG Group as a whole has adequate resources to continue in

operational existence for the foreseeable future and that it is appropriate to adopt the going concern basis in preparing the

financial statements.


25 LSE: ABG

Non IFRS Measures

ABG 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 ABG‟s financial condition and operating results. These measures are not in accordance with, or a

substitute for, IFRS, and may be different from or inconsistent with non-IFRS financial measures used by other companies.

These measures are explained further below.

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; - Unrealised mark-to-market gains and losses on provisional pricing from copper and gold sales contracts; and - Export duties.

Cash cost per ounce sold is a non-IFRS financial measure. Cash costs include all costs absorbed into inventory, as well as

royalties, by-product credits, and production taxes, and exclude capitalised production stripping costs, inventory purchase

accounting adjustments, unrealised gains/losses from non-hedge currency and commodity contracts, depreciation and

amortisation and corporate social responsibility charges. Cash cost is calculated net of co-product revenue.

The presentation of these statistics in this manner allows ABG to monitor and manage those factors that impact production

costs on a monthly basis. ABG calculates cash costs based on its equity interest in production from its mines. Cash costs per

ounce sold are calculated by dividing the aggregate of these costs by gold ounces sold. Cash costs and cash costs per ounce

sold are calculated on a consistent basis for the periods presented.

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 costs per ounce sold, and adding corporate administration costs, corporate reclamation and remediation costs for operating mines, corporate social responsibility expenses, mine exploration and study costs, capitalised stripping and underground development costs and sustaining capital expenditure. This is then divided by the total ounces sold. For a reconciliation between cash costs per ounce sold and AISC refer to the segmental analysis on page 37.

AISC is intended to provide additional information of what the total sustaining cost for each ounce sold is, taking into account expenditure incurred in addition to direct mining costs, depreciation and selling costs.

EBITDA is a non-IFRS financial measure. ABG 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. Prior year EBITDA was restated by US$0.6 million to reflect the reclassification of bank charges from corporate administration charges to finance expense.

Adjusted EBITDA is a non-IFRS financial measure. It is calculated by excluding one-off costs or credits relating to non-routine

transactions from EBITDA. It excludes other credits and charges that individually or in aggregate, if of a similar type, are of a nature or size that requires explanation in order to provide additional insight into the underlying business performance.

EBIT is a non-IFRS financial measure and reflects EBITDA adjusted for depreciation and amortisation and goodwill

impairment charges.

Adjusted net earnings is a non-IFRS measure. It is calculated by excluding one-off costs or credits relating to non-routine

transactions from net profit attributed to owners of the parent. 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.

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.

Cash cost per tonne milled is a non-IFRS financial measure. Cash costs include all costs absorbed into inventory, as well as

royalties, by-product credits, and production taxes, and exclude capitalised production stripping costs, inventory purchase

accounting adjustments, unrealised gains/losses from non-hedge currency and commodity contracts, depreciation and

amortisation and corporate social responsibility charges. Cash cost is calculated net of co-product revenue. ABG calculates

cash costs based on its equity interest in production from its mines. Cash costs per tonne milled are calculated by dividing the

aggregate of these costs by total tonnes milled.

Operating cash flow per share is a non-IFRS financial measure and is calculated by dividing Net cash generated by

operating activities by the weighted average number of Ordinary Shares in issue.


26 LSE: ABG

Mining statistical information

The following describes certain line items used in the ABG 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.

- Total tonnes mined includes open pit material plus underground ore tonnes hoisted.

- Strip ratio – measures the ratio 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.


27 LSE: ABG

Principal Risks and Uncertainties There are a number of potential risks and uncertainties which could have a material impact on the ABG Group‟s performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 December 2012. As such these risks continue to apply to the Group for the remaining six months of the financial year. The principal risks and uncertainties disclosed in the 2012 annual report were categorised as: - Single country risk: In order to ensure continued growth, we need to identify new resources and development opportunities through exploration and acquisition targets. - Reserves and resources estimates: Our stated mineral reserves and resources are estimates based on a range of assumptions, including gold price assumptions, geological, metallurgical and technical factors; there can be no assurance that the anticipated tonnages or grades will be achieved. - Changes affecting the majority shareholding: Members of the Barrick Group hold approximately 74% of our issued share capital. As a result Barrick is able to exercise significant influence over all matters requiring shareholder approval. - Commodity prices: Our financial performance is highly dependent upon the price of gold and, to a lesser extent, the price of copper and silver. The prices of these commodities are affected by a number of factors beyond our control. Rapid fluctuations in pricing of these commodities will have a corresponding impact on our financial position and may also adversely affect the carrying value of our assets, particularly in the context of impairment. - Cost and capital expenditure: We operate a cyclical business where fluctuations in operating cash flow and capital expenditure may adversely affect our financial position. In addition, industry cost pressures, notably as regards labour, capital equipment and energy may affect our cash flow and capital expenditure. - Political, legal and regulatory developments: Changes to existing law and regulations, or more stringent application or interpretation of current laws and regulations by relevant government authorities, could adversely affect our operations and development projects. In particular, as our revenue is currently derived exclusively from the production from our facilities in Tanzania, our business operations and financial condition may be adversely affected by legal and regulatory changes and developments in Tanzania, or if our existing mineral development agreements (MDAs) are not honoured by the Tanzanian government. We may also be adversely affected by changes in global economic conditions, political and/or economic instability in Tanzania or any of its surrounding countries. - Taxation reviews: Our financial condition may be adversely affected in the event of the introduction of revised royalty or corporate tax regimes in Tanzania that go beyond agreements reached and contained in our MDAs. Our financial condition may also be adversely affected if we are unsuccessful in our current appeals and/or discussions with the TRA or the Ministry of Finance regarding outstanding tax assessments and unresolved tax disputes, particularly as regards the application of the VAT relief to our operations. - Utilities supply: Power stoppages, fluctuations and disruptions in electrical power supply or other utilities could adversely affect our operations and impact our financial condition. In addition, increases in power costs would make production more costly and alternative power sources may not be available. - Community relations: A failure to adequately engage or manage relations with local communities and stakeholders could have a direct impact on our ability to operate. - Land acquisitions: Progression of our mining activities is, in certain instances, dependant on our ability to complete additional land acquisitions required to support our mine plans. Increases in the cost of land acquisitions required to support the expansion and continuation of our mining activities and/or delays in completing such acquisitions could have a material adverse effect on operating conditions, particularly at North Mara. - Variations to production and cost estimates: Our actual production and costs may vary from estimates of future production, cash costs and capital costs for a variety of reasons and costs of production may also be affected by a variety of factors. Failure to achieve production or cost estimates could have an adverse impact on our future business, cash flows, profitability, results of operations and financial condition. - Loss of critical processes: Our mining, processing, development and exploration activities depend on the continuous availability of our operational infrastructure, in addition to reliable utilities and water supplies and access to roads. Any failure or unavailability of operational infrastructure, for example through equipment failure or disruption, could adversely affect production output and/or impact exploration and development activities. Deficiencies in core supply chain availability could also adversely affect our operations. - Environmental hazards and rehabilitation: Our activities are subject to environmental hazards as a result of processes and chemicals used in its extraction and production methods and we may be liable for losses and costs associated with environmental hazards at our operations. We may also have our licences and permits withdrawn or suspended as a result of such hazards, or may be forced to undertake extensive clean-up and remediation action. Any such action could have a material adverse effect on our business, operations and financial condition. - Employee, contractor and industrial relations: Our business significantly depends upon our ability to recruit and retain qualified personnel, the loss of which may negatively impact our ability to operate. Our business also depends on good relations generally with our employees and employee representative groups, such as trade unions. A breakdown in these relations could result in a decrease in production levels and/or increased costs, which in turn could have a material adverse effect on our business. In addition to employees, we depend on certain key contractors. Interruptions in contracted services could result in production slowdowns and/or stoppages. - Security, trespass and vandalism: We face certain risks in dealing with trespass, theft, corruption and vandalism at our mines and unauthorised small-scale mining in proximity to and on specific areas covered by our exploration and mining licences, which may have an adverse effect upon our operations and financial condition. Further information regarding these risks and uncertainties can be found on pages 52 to 55 of the 2012 Annual Report which is available at www.africanbarrickgold.com.


28 LSE: ABG

Statement of Directors’ Responsibility

The Directors confirm that, to the best of their knowledge, the condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union. The half-year management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R and Disclosure and Transparency Rule 4.2.8R, namely:

an indication of important events that have occurred during the first six months of the financial year and their impact on the

condensed consolidated interim financial information, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

material related-party transactions in the first six months of the financial year and any material changes in the related party

transactions described in the last Annual Report. The Directors of African Barrick Gold plc are listed in the African Barrick Gold plc Annual Report for 31 December 2012. A list of current Directors is maintained on the African Barrick Gold plc Group website: www.africanbarrickgold.com. On behalf of the Board Greg Hawkins Kelvin Dushnisky Chief Executive Officer Chairman 29 July 2013


29 LSE: ABG

Auditor’s Review Report

Independent review report to African Barrick Gold plc

Introduction

We have been engaged by the company to review the condensed consolidated interim financial information in the half-yearly

financial report for the six months ended 30 June 2013, which comprises the Consolidated Income Statement, Consolidated

Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity,

Consolidated Statement of Cash Flows and related notes. We have read the other information contained in the half-yearly

financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information

in the condensed consolidated interim financial information.

Directors’ responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible

for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's

Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the

European Union. The condensed consolidated interim financial information included in this half-yearly financial report has been

prepared in accordance with International Accounting Standard 34, „Interim Financial Reporting‟, as adopted by the European

Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial information in the

half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the

company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other

purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to

whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, „Review

of Interim Financial Information Performed by the Independent Auditor of the Entity‟ issued by the Auditing Practices Board for

use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons

responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially

less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and

consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be

identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim

financial information in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material

respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and

Transparency Rules of the United Kingdom's Financial Conduct Authority.

PricewaterhouseCoopers LLP

Chartered Accountants, London

29 July 2013

Notes:

(a) The maintenance and integrity of the African Barrick Gold Plc website is the responsibility of the directors;

the work carried out by the auditors does not involve consideration of these matters and, accordingly, the

auditors accept no responsibility for any changes that may have occurred to the financial statements since

they were initially presented on the website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from

legislation in other jurisdictions.


30 LSE: ABG

FINANCIAL STATEMENTS Consolidated Income Statement

Notes For the six months ended 30

June

For the year ended

31 December

(Unaudited) (Unaudited) (Audited)

(US$‟000) 2013 2012 Restated 2012 Restated

Revenue

499,752 534,467 1,087,339

Cost of sales

(414,884) (374,737) (797,859)

Gross profit 84,868 159,730 289,480

Corporate administration (14,909) (24,985) (51,567)

Exploration and evaluation costs

(7,554) (10,385) (28,961)

Corporate social responsibility expenses (6,918) (6,750) (14,445)

Impairment charges 7 (927,690) - (44,536)

Other charges 8 (22,093) (4,275) (17,671)

(Loss)/profit before net finance expense and taxation (894,296) 113,335 132,300

Finance income 9

1,005 1,079 2,102

Finance expense 9 (4,775) (5,313) (10,305)

(3,770) (4,234) (8,203)

(Loss)/profit before taxation (898,066) 109,101 124,097

Tax credit/(expense) 10 184,648 (35,022) (72,604)

Net (loss)/profit for the period (713,418) 74,079 51,493

(Loss)/profit attributable to:

- Non-controlling interests (12,188) 370 (11,287)

- Owners of the parent (701,230) 73,709 62,780

(Loss)/earnings per share:

- Basic (loss)/earnings per share (cents) 11 (171.0) 18.0 15.3

- Diluted (loss)/earnings per share (cents) 11 (171.0) 18.0 15.3

Consolidated Statement of Comprehensive Income

For the six months ended 30 June

For the year ended

31 December


(US$‟000) 2013 2012 Restated 2012

Restated


Items that may be reclassified subsequently to profit or loss:

Changes in fair value of cash flow hedges 560 (222) 363

Total comprehensive (loss)/income for the period (712,858) 73,857 51,856

Attributed to:

- Non-controlling interests

(12,188) 370 (11,287)

- Owners of the parent (700,670) 73,487 63,143

The notes on pages 34-50 form an integral part of this financial information.


31 LSE: ABG

Consolidated Balance Sheet

Notes As at

30 June As at

31 December



ASSETS Non-current assets

Goodwill and intangible assets 13 211,190 258,513 278,221

Property, plant and equipment 14 1,288,114 1,888,363 1,975,040

Deferred tax assets

49,510 23,186 2,399

Non-current portion of inventory

71,123 95,033 115,553

Derivative financial instruments 15 2,645 254 467

Other assets

130,251 124,626 137,565

1,752,833 2,389,975 2,509,245

Current assets

Inventories

282,471 349,742 332,232

Trade and other receivables

37,193 23,443 44,227

Derivative financial instruments 15 4,936 1,723 2,207

Other current assets

96,354 38,276 44,314

Cash and cash equivalents

320,873 503,667 401,348

741,827 916,851 824,328

Total assets 2,494,660 3,306,826 3,333,573

EQUITY AND LIABILITIES

Share capital and share premium

929,199 929,199 929,199

Retained earnings and other reserves 1,075,515 1,852,574 1,826,512

Total owners' equity 2,004,714 2,781,773 2,755,711

Non-controlling interests 10,392 34,545 22,580

Total Equity 2,015,106 2,816,318 2,778,291

Non-current liabilities

Borrowings 16 80,000 - -

Deferred tax liabilities

37,686 151,487 175,114


Provisions

147,843 164,172 180,548

Other non-current liabilities

17,656 17,561 21,064

284,751 334,158 377,020

Current liabilities

Trade and other payables

171,547 150,340 169,904


Provisions

10,610 1,042 1,040

Other current liabilities

4,132 4,129 6,889

194,803 156,350 178,262

Total liabilities 479,554 490,508 555,282

Total equity and liabilities 2,494,660 3,306,826 3,333,573



32 LSE: ABG

Consolidated Statement of Changes in Equity

Notes Share capital

Share premium

Contributed surplus/Other reserve

Cash flow hedging reserve

Stock option reserve

Retained earnings

Total owners' equity

Total non- controlling interests

Total equity

(US$‟000)

Balance at 31 December 2011 (Audited) 62,097 867,102 1,368,713 - 2,041 461,278 2,761,231 37,473 2,798,704

Total comprehensive income for the period

- - - (222) - 73,709 73,487 370 73,857

Dividends to equity holders of the Company

- - - - - (53,721) (53,721) - (53,721)

Distributions from non-controlling interests

- - - - - - - (3,298) (3,298)

Stock option grants

- - - - 776 - 776 - 776

Balance at 30 June 2012 Restated (Unaudited)

62,097 867,102 1,368,713 (222) 2,817 481,266 2,781,773 34,545 2,816,318

Total comprehensive income

- - - 585 - (10,929) (10,344) (11,657) (22,001)

Dividends to equity holders of the Company

- - - - - (16,403) (16,403) - (16,403)

Distributions from non-controlling interests - - - - - - - (308) (308)

Stock option grants - - - - 685 - 685 - 685

Balance at 31 December 2012 Restated (Audited) 62,097 867,102 1,368,713 363 3,502 453,934 2,755,711 22,580 2,778,291

Total comprehensive income/ (loss) - - - 560 - (701,230) (700,670) (12,188) (712,858)

Dividends to equity holders of the Company 12 - - - - - (50,441) (50,441) - (50,441)

Stock option grants - - - - 114 - 114 - 114

Balance at 30 June 2013 (Unaudited) 62,097 867,102 1,368,713 923 3,616 (297,737) 2,004,714 10,392 2,015,106


African Barrick Gold results for the six months ended 30 June 2013

33 LSE: ABG

Consolidated Statement of Cash Flows


For the year ended

31 December

Notes (Unaudited) (Unaudited) (Audited)


Cash flows from operating activities


Adjustments for: Taxation (184,648) 35,022 72,604

Depreciation and amortisation 90,101 75,187 168,229

Finance items 3,770 4,234 8,203

Impairments 7 927,690 - 44,536

Gain on disposal of property, plant and equipment (86) (2,250) (616)

Working capital adjustments

(25,856) (58,390) (74,070)

Other

3,067 1,399 3,088

Cash generated from operations before interest and tax 100,620 129,281 273,467

Finance income 9 1,005 1,079 2,102

Finance expenses 9 (2,608) (3,258) (6,284)

Income tax paid

- - (551)

Net cash generated by operating activities 99,017 127,102 268,734

Cash flows from investing activities

Purchase of property, plant and equipment

(207,210) (135,542) (323,506)

Investments in other assets (2,032) (15,083) (24,473)

Acquisition of subsidiary, net of cash acquired - - (22,039)

Other investing activities

420 2,739 (1,468)

Net cash used in investing activities (208,822) (147,886) (371,486)

Fre (108,061) Cash flows from financing activities

Long term financing 16 80,000 - -

Dividend paid 12 (50,441) (53,721) (70,125)

Distributions to non-controlling interest holders - (3,298) (3,606)

Finance lease liability payments

(1,971) (3,748) (5,708)

Net cash provided by/(used in) financing activities 27,588 (60,767) (79,439)

Net decrease in cash and equivalents (82,217) (81,551) (182,191)

Net foreign exchange difference 1,742 1,064 (615)

Cash and cash equivalents at 1 January 401,348 584,154 584,154

Cash and cash equivalents at period end 320,873 503,667 401,348



34 LSE: ABG

Notes to the Consolidated Interim Financial Information

1. GENERAL INFORMATION

African Barrick Gold plc (the “Company”) is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in the UK. It is registered in England and Wales with registered number 7123187. The address of its registered office is 6 St James‟s Place, London SW1A 1NP, United Kingdom. Barrick Gold Corporation currently owns 73.9 percent of the shares of the Company and is the ultimate controlling party of the Group. This condensed consolidated interim financial information for the six months ended 30 June 2013 were approved for issue by the Board of Directors of the company on 29 July 2013. The condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012 were approved by the Board of Directors on 7 March 2013 and delivered to the Registrar of Companies. The report of the auditors‟ on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. The condensed consolidated interim financial information has been reviewed, not audited. 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 Tanzania and Kenya.

2. BASIS OF PREPARATION OF THE CONDENSED ANNUAL FINANCIAL STATEMENTS

The condensed consolidated interim financial information for the six months ended 30 June 2013 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, „Interim Financial Reporting‟ as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2012, which have been prepared in accordance with IFRS as adopted by the European Union. The condensed consolidated interim financial information has been prepared under the historical cost basis, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. The financial information is presented in US dollars ($) and all monetary results are rounded to the nearest thousand ($‟000) except when otherwise indicated. Where a change in the presentational format between the prior period and the current period financial information has been made during the period, comparative figures have been restated accordingly. The following presentational changes were made during the current period:

Bank charges previously included in corporate administration expenses have been reclassified to finance expense (2013: US$0.5 million; 2012: US$0.6 million).

The implementation of IFRIC 20, „Stripping costs in the production phase of a surface mine‟ resulted in a restatement of prior period financial information. Refer to note 5 for details on the change in accounting policy. The impact of the seasonality on operations is not considered as significant on the condensed consolidated interim financial information. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing the consolidated interim financial information.

3. ACCOUNTING POLICIES

The accounting policies adopted are consistent with those used in the African Barrick Gold plc annual financial statements for the year ended 31 December 2012 except as described below.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The accounting policy for stripping costs has been updated to reflect the impact of IFRIC 20, „Stripping costs in the production phase of a surface mine‟. Refer to note 5 for details on the change in accounting policy.

IFRS 13 „Fair value measurement‟. IFRS 13 measurement and disclosure requirements are applicable for the December 2013 year end. The Group has included the disclosures required by IAS 34 para 16A(j). Refer to note 15.


35 LSE: ABG

There is one interpretation effective for the period which materially impacts the Group being IFRIC 20, „Stripping costs in the

production phase of a surface mine‟. Refer to note 5 for further details. There are no other new standards, interpretations or

amendments to standards issued and effective for the period which materially impacted on the Group.

The following exchange rates to the US dollar have been applied:

As at 30 June

2013

Average six months

ended 30 June

2013

As at 30 June

2012

Average six months

ended 30 June

2012

As at 31

December 2012

Average year ended

31 December

2012

South African Rand (US$:ZAR) 9.88 9.20 8.18 7.93 8.49 8.19

Tanzanian Shilling (US$:TZS) 1,603 1,590 1,569 1,572 1,572 1,572

Australian Dollars (US$:AUD) 1.08 0.99 0.98 0.97 0.96 0.97

UK Pound (US$:GBP) 0.66 0.65 0.64 0.63 0.62 0.63

4. ESTIMATES

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group‟s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2012, with the exception of changes in estimates that are required in determining the provision for income taxes (see note 3).

5. CHANGE IN ACCOUNTING POLICY

Adoption of IFRIC 20

In October 2011, the International Accounting Standards Board issued IFRIC 20, “Stripping costs in the production phase of a surface mine”. The interpretation applies to waste removal costs incurred in surface mining activity during the production phase of a mine and addresses the recognition of production stripping costs as an asset, initial measurement of the stripping activity asset and the subsequent measurement of the stripping activity asset.

IFRIC 20 is applicable for annual periods beginning on or after 1 January 2013. The Group has applied this Interpretation and restated the 2012 comparative financial information. As at the beginning of the earliest period presented, any previously recognised asset balance that resulted from stripping activity undertaken during the production phase („predecessor stripping asset‟) has been reclassified as a part of an existing asset to which the stripping activity related, to the extent that there remains an identifiable component of the ore body with which the predecessor stripping asset can be associated. Such balances shall be depreciated or amortised over the remaining expected useful life of the pit to which each predecessor stripping asset balance relates.

If there was no identifiable component of the ore body to which that predecessor stripping asset relates, it was recognised in opening retained earnings at the beginning of the earliest period presented. It has been identified that the capitalised stripping asset that already exists is still providing access to all future stages of the pits therefore will be depreciated over the remaining ounces of gold in each pit. The impact of the change in accounting policy on the Consolidated Income Statement, Consolidated Statement of Financial Position and Consolidated Statements of Cash Flows is set out below:


36 LSE: ABG

Consolidated Income Statement Restated Previously reported

For the six months ended

30 June

For the year ended

31 December


30 June

For the year ended

31 December

(US$‟000) 2012 2012 2012 2012

Net adjustments:

Direct mining costs 274,882 576,070 287,423 581,483

Depreciation and amortisation 70,769 159,446 70,472 158,883

Tax expense 35,022 72,604 31,335 71,063

Total 380,673 808,120 389,230 811,429

Consolidated Balance Sheet (US$‟000)

Net adjustments:

Mineral properties and mine development costs 812,746 819,063 795,907 807,947

Inventory 444,775 447,785 449,370 454,051

Deferred tax liabilities 151,487 175,114 147,800 173,574

Consolidated Cash Flow Statement (US$‟000)

Cash flows provided by operating activities 127,102 268,734 110,309 257,903

Cash flows used in investing activities (147,886) (371,486) (131,093) (360,655)

6. 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; Tulawaka gold mine; Bulyanhulu gold

mine; Buzwagi gold mine; and a separate Corporate and Exploration segment, which primarily consist of costs related to

corporate administration and exploration and evaluation activities (“Other”).

Segment results and assets include items directly attributable to the segment as well as those that can be allocated on a

reasonable basis. Segment assets consist primarily of property, plant and equipment, inventories, other assets and receivables.

Capital expenditures comprise additions to property, plant and equipment. Segment liabilities are not reported since they are not

considered by the CODM as material to segment performance. The Group has also included segment cash costs.

Segment information for the reportable operating segments of the Group for the six months ended 30 June 2013 and 30 June

2012, and year ended 31 December 2012 is set out below.


37 LSE: ABG

For the six months ended 30 June 2013

(Unaudited)

(US$‟000) North Mara Tulawaka Bulyanhulu Buzwagi Other Total

Gold revenue 194,992 12,365 127,244 142,454 - 477,055

Co-product revenue 365 27 7,704 14,601 - 22,697

Total segment revenue 195,357 12,392 134,948 157,055 - 499,752

Segment cash operating cost1 (96,538) (19,441) (98,425) (103,103) (22,463) (339,970)

Other charges and corporate social responsibility expenses (6,729) (7,187) (3,355) (3,814) (7,926) (29,011)

EBITDA2 92,090 (14,236) 33,168 50,138 (30,389) 130,771

Impairment charges (173,938) (16,701) - (690,478) (46,573) (927,690)

Depreciation and amortisation (40,859) (8,711) (16,645) (29,332) (1,830) (97,377)

EBIT2 (122,707) (39,648) 16,523 (669,672) (78,792) (894,296)

Total segment finance income

1,005

Total segment finance expense

(4,775)

Loss before tax

(898,066)

Income tax credit

184,648

Loss for the period

(713,418)

Capital expenditure: Sustaining 23,962 583 15,546 20,657 85 60,833

Expansionary 504 - 52,421 - 941 53,866

Capitalised development 28,917 - 24,102 41,338 - 94,357

Reclamation asset adjustment (5,950) (161) (9,208) (6,809) - (22,128)

Total capital expenditure 47,433 422 82,861 55,186 1,026 186,928

Cash costs: Segmental cash operating cost

1 96,538 19,441 98,425 103,103

317,507

Deduct: co-product revenue (365) (27) (7,704) (14,601)

(22,697)

Total cash costs 96,173 19,414 90,721 88,502

294,810

Sold ounces3 130,200 7,950 87,802 96,367

322,319

Cash cost per ounce sold² 739 2,442 1,033 918

915

Equity ounce adjustment4

(12)

Attributable cash cost per ounce sold²

903

All-in sustaining costs: Total cash costs

2 739 2,442 1,033 918

915

Reclamation accretion and depreciation 34 77 8 21

24

Corporate administration 39 149 80 54

46

Mine site project development/exploration 16 (20) 4 3

8

Corporate social responsibility expenses 29 87 5 4

21

Capitalised development 222 - 274 429

293

Sustaining capital including land purchases 234 73 177 214

209

All-in sustaining costs per ounce sold2 1,313 2,808 1,581 1,643

1,516


(9)

Attributable all-in sustaining costs per ounce sold

2

1,507


38 LSE: ABG

For the six months ended 30 June 2012 Restated

(Unaudited)


Gold revenue 130,911 43,499 218,581 116,975 - 509,966


Total segment revenue 131,203 43,586 231,943 127,735 - 534,467


Other charges and corporate social responsibility expenses (3,460) (717) 551 (2,220) (5,179) (11,025)

EBITDA² 49,273 15,332 125,728 34,320 (40,549) 184,104

Impairment charges - - - - - -


EBIT2 27,680 4,219 109,255 14,283 (42,102) 113,335


1,079


(5,313)

Profit before tax

109,101

Income tax expense

(35,022)

Profit for the period

74,079

Capital expenditure: Sustaining 21,178 4,700 15,059 21,832 4,364 67,133

Expansionary 4,557 1,861 1,168 - 3,053 10,639

Capitalised development 20,966 3,605 22,126 12,696 - 59,393

Reclamation asset adjustment 1,253 (602) 1,886 1,997 - 4,534

Total capital expenditure 47,954 9,564 40,239 36,525 7,417 141,699


1 78,470 27,537 106,766 91,195

303,968


(24,501)

Total cash costs 78,178 27,450 93,404 80,435

279,467

Sold ounces3 79,600 26,250 133,417 71,249

310,516

Cash cost per ounce sold² 982 1,046 700 1,129

900


(4)

Attributable cash cost per ounce sold²

896

All-in sustaining costs:

Total cash costs2 982 1,046 700 1,129

900


7


80

Mine site project development/exploration 13 4 5 6

7


22

Capitalised development 263 137 166 178

191


258


1,465


-


2

1,465


39 LSE: ABG

For the year ended 31 December 2012 Restated

(Audited)


Gold revenue 310,549 75,458 393,347 259,954 - 1,039,308


Total segment revenue 311,098 75,601 417,658 282,982 - 1,087,339


Other charges and corporate social responsibility expenses (12,921) (1,995) 40 (4,944) (12,296) (32,116)

EBITDA2 119,758 15,614 204,348 89,386 (92,824) 336,282

Impairment charges - (44,536) - - - (44,536)


EBIT2 64,486 (48,753) 171,284 41,750 (96,467) 132,300


2,102


(10,305)

Profit before tax

124,097

Income tax expense

(72,604)

Profit for the period

51,493

Capital expenditure: Sustaining 47,759 13,157 35,193 56,441 8,988 161,538

Expansionary 10,091 2,922 36,814 62 - 49,889

Capitalised development 28,139 7,258 45,605 39,455 - 120,457

Reclamation asset adjustment 7,540 1,251 (43) 10,494 - 19,242

Total capital expenditure 93,529 24,588 117,569 106,452 8,988 351,126


1 178,419 57,992 213,350 188,652

638,413


(48,031)

Total cash costs 177,870 57,849 189,039 165,624

590,382

Sold ounces3 186,600 45,600 235,410 155,322

622,932

Cash cost per ounce sold2 953 1,269 803 1,066

948


(7)

Attributable cash cost per ounce sold2

941

All-in sustaining costs (unaudited): Total cash costs

2 953 1,269 803 1,066

948


6


83

Mine site project development/exploration 31 48 9 6

18


23

Capitalised development 151 159 194 254

193


300


1,571


(1)


2

1,570

1 The Chief Operating Decision Maker reviews cash operating costs for the four 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 25 for definitions.

3 Reflects 100% of ounces sold.

4 Reflects the adjustment for non-controlling interests at Tulawaka.


40 LSE: ABG

As at

30 June As at

31 December


Segment assets

North Mara 628,488 756,511 774,687

Tulawaka 25,363 104,957 58,060

Bulyanhulu 1,196,966 1,138,681 1,130,728

Buzwagi 320,814 871,246 934,589

Other 323,029 435,431 435,509

Total segment assets 2,494,660 3,306,826 3,333,573

7. IMPAIRMENT CHARGES

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. The prevailing gold price fell significantly during the second quarter of 2013 due to macro economic factors mainly as a result of positive economic news from the United States of America. This forced a review of the gold price outlook used for long term planning. Management expect weak investment demand to drive continued volatility and hold gold prices to an average of US$1,300 per ounce, a price that we consider a market participant would use to calculate the carrying value of our assets. Given the impact of the lower gold price outlook and the impact on the life of mine plans and margins of the operating mines, operating performance was reassessed in order to ensure optimised returns and cash flows and a review for an impairment trigger was performed during the second quarter of 2013 for each cash generating unit as described below. Cash generating units are determined on the same basis as operating segments. Refer to note 6 for further details. Given the long mine life of Bulyanhulu, and the quality of the reserve base, the existing mine plan and the 2012 breakeven price being below the revised gold price outlook, the reduction in the gold price outlook is not expected to result in an impairment therefore no impairment testing was performed. An impairment adjustment for the goodwill and long-lived assets of Tulawaka was already recorded in 2012. The remaining book value of long-lived assets is US$1.1 million which is expected to be recovered from use over the closure period therefore no further impairment testing was performed for long-lived assets at Tulawaka, however a review of the supplies balance on hand at the end of June 2013 prompted a supplies inventory impairment of US$16.7 million. As reported in the consolidated financial statements for the year ended 31 December 2012, Buzwagi‟s cost structure combined with the grade profile made it most susceptible to changes in the gold price. As a result of the lower gold price, the mine plan at Buzwagi has been reassessed in order to optimise returns and cash flow generation. As a result, the Group today announced an update to the mine plan at Buzwagi. The revised plan is aimed at significantly reducing the all-in sustaining cost of the mine and generating positive cash flow at current gold prices. The life of mine has been reduced to six and a half years, with mining ceasing after three and a half years and stockpiles on hand being processed thereafter. The above change represents an impairment trigger which resulted in a review of the recoverable amount for Buzwagi. The mine plan at North Mara has also been reassessed to identify any uneconomical ounces given lower gold prices. As a result, ounces from Nyabirama Stage 5 and Gokona Stage 4 have been removed from the mine plan resulting in a reduction in the life of mine to 10 years and an overall reduction of contained ounces mined. This represents an impairment trigger which resulted in a review of the recoverable amount for North Mara. Since the acquisition of the Nyanzaga project as part of Tusker in April 2011, the Group has been investing in development of the resource, which culminated in the update of the in-pit resource to in excess of 4.6Moz in January 2012, a fourfold increase from the resource at acquisition. Results from the pre-feasibility study indicate that further options will have to be investigated to progress the project into development in future. Desktop work will continue in order to continue to improve our understanding of the structural controls of the mineralisation and ultimately to see if the Group can develop the mine with lower upfront capital expenditures. As a result, the recoverable amount for Nyanzaga has been calculated on a fair value less cost to dispose basis, using a comparable enterprise value for companies holding similar assets to arrive at a value per ounce. Given the volatility in the market and the lack of comparable transactions in the current gold price environment, the value of this exploration asset is highly judgemental. The review compared the recoverable amount of assets for each cash generating unit (“CGU”) to the carrying value of the CGU 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


41 LSE: ABG

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. The expected future cash flows utilised in the NPV model are derived from estimates of projected future revenues, future cash costs of production and capital expenditures contained in the life of mine (“LOM”) plan for each CGU. The Group‟s LOM plans reflect proven and probable reserves and are based on detailed research, analysis and modelling to optimise the internal rate of return for each CGU. The discount rate applied to calculate the present value is based upon the real weighted average cost of capital applicable to the CGU. The discount rate reflects equity risk premiums over the risk-free rate, the impact of the remaining economic life of the CGU and the risks associated with the relevant cash flows based on the country in which the CGU is located. These risk adjustments are based on observed equity risk premiums, historical country risk premiums and average credit default swap spreads for the period. The VIU of a CGU is generally lower than its FVLCD, due primarily to the fact that the optimisation of the mine plans has been taken into account when determining its FVLCD. Consequently, the recoverable amount of a CGU for impairment testing purposes is determined based on its FVLCD. The key economic assumptions used in this review were:

As at 30 June As at 31

December

2013 2012

Gold price per ounce (applied to all periods) US$1,300 US$1,700 South African Rand (US$:ZAR) 8.75 8.00 Tanzanian Shilling (US$:TZS) 1,600 1,600

Long-term oil price per barrel US$120 US$90 Discount rates 5% 4.16%-5.66% NPV multiples 1.00 0.90–1.30

The impairment review resulted in a post tax impairment to the long lived assets at Buzwagi of US$677.5 million and supplies inventory of US$13.0 million (2012: no impairment charge) and at North Mara in a post tax impairment to goodwill of US$21.0 million and long lived assets of US$152.9 million (2012: no impairment charge). In addition, the goodwill and acquired exploration potential intangible asset that arose on the acquisition of Tusker Gold Ltd and subsequent investment in the asset, has been impaired by US$22.0 million and US$24.6 million respectively. On a gross basis, and before taking into account the impact of deferred tax, the total impairment charge amounted to US$690.5 million at Buzwagi, US$173.9 million at North Mara, US$46.6 million relating to Nyanzaga and US$16.7 million at Tulawaka. For purposes of testing for impairment of non-current assets of the Group‟s operating mines, a reasonably possible change in the key assumptions used to estimate the recoverable amount could result in an additional impairment charge. The carrying value of the net assets of Buzwagi and North Mara are most sensitive to changes in key assumptions in respect of gold price and a US$100 per ounce decrease in isolation, would lead to an additional impairment at Buzwagi of US$83.3 million and at North Mara of US$168.6 million. However, should the gold price decline further, the mine plans would again be reassessed in order to optimise returns and cash flows. We are progressing our review at North Mara in order to optimise the remaining life of mine and assess the viability of this given the current operating environment. This will incorporate a number of factors, particularly the likely availability and cost of land. We expect to complete the review during H2 2013, and should there be any further changes to the life of mine we will update the market in due course on any impact that may have on the future carrying value.


42 LSE: ABG

The impairment charges recognised in the income statement for the six months ended 30 June 2013 comprise the following: For the six months ended

30 June For the year ended

31 December


(US$‟000) 2013 2012 2012

Buzwagi 690,478 - -

North Mara 173,938 - -

Tulawaka 16,701 - 44,536

Tusker/Nyanzaga 46,573 - -

Gross impairment charge 927,690 - 44,536

Comprising:

Impairment of goodwill 43,069 - 13,805

Impairment of intangible assets 24,550 - -

Impairment of property, plant and equipment 783,501 - 30,731

Impairment of non-current inventory 47,830

Impairment of supplies inventory 28,740 - -

Gross impairment charge 927,690 - 44,536

Deferred income tax (201,012) - -

Impairment charge, net of tax 726,678 - 44,536

8. OTHER CHARGES


For the year ended

31 December



Other expenses

Operational Review costs1 1,629 - -

Tulawaka non-operational costs2 4,693 - -

Severance payments - - 400

Foreign exchange losses (net) 68 - -

Non-hedge derivative losses (net) 4,807 2,956 1,719

Construction and consumable inventory write-down - 1,667 1,461

Bad debt expense 1,611 527 740

Indirect tax adjustments 3,784 358 2,952

Asset write downs - - 897

Legal fees for litigation 1,018 789 1,655

CNG related costs3 2,812 - 6,676

Discounting of indirect tax receivables 1,375 - 4,185

Other 513 2,573 1,945

Total¹ 22,310 8,870 22,630

Other income

Profit on disposal of property, plant and equipment (86) (2,250) (616)

Construction and consumable inventory gains (131) - -

Foreign exchange gains (net) - (2,345) (4,343)

Total (217) (4,595) (4,959)

Total other charges 22,093 4,275 17,671

1 Organisational effectiveness review costs include all costs related to the organisational review including severance costs and consulting fees.

2 Tulawaka non-operational costs include expenditure incurred after the cessation of mining activities that is not closure or operational in nature, and includes retrenchment costs.

3 Costs incurred as a direct result of the China National Gold interest in ABG were included in other charges. These residual costs include advisory, travel and accommodation costs and retention scheme provisions.


43 LSE: ABG

9. FINANCE INCOME AND FINANCE EXPENSE

Finance income


30 June

For the year ended

31 December


(US$‟000) 2013 2012

Restated 2012 Restated

Interest on time deposits 753 618 1,231

Other 252 461 871

Total 1,005 1,079 2,102

Finance expense


30 June

For the year ended

31 December


(US$‟000) 2013 2012

Restated 2012 Restated

Unwinding of discount1,3

2,167 2,055 4,021

Interest on bank overdraft and external debt 12 7 12

Revolving credit facility charges2 1,510 1,499 3,014

Interest on finance lease liability 333 459 841

Bank charges4 453 624 1,216

Other 300 669 1,201

Total 4,775 5,313 10,305

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.

3 For cash flow purposes unwinding of discount is excluded from the finance expense movement.

4 Bank charges previously included in corporate administration expenses have been reclassified to finance expense.

10. TAX (CREDIT)/EXPENSE


30 June

For the year ended

31 December



Current tax:

Current tax on profits for the period¹ 28 737 -

Adjustments in respect of prior years - - 120

Total current tax 28 737 120

Deferred tax: Origination and reversal of temporary differences (184,676) 30,598 70,943

Adjustments in respect of prior years - 3,687 1,541

Total deferred tax (184,676) 34,285 72,484

Income tax (credit)/expense (184,648) 35,022 72,604 1 The current income tax charge is in respect of taxable profits arising in Barbados.


44 LSE: ABG

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 follow:


For the year ended

31 December


(US$‟000) 2013 2012 2012

Tax on (loss)/profit calculated at the Tanzanian tax rate of 30% (269,420) 32,730 37,229

Tax effects of: Items not taxable / deductible for tax purposes

Prior year adjustments - - 9,419

Other non-deductible expenses /(non-taxable income) 93 - 1,341

Effect of tax rates in foreign jurisdictions (1,754) (1,065) (3,187)

Deferred tax assets not recognised 73,540 3,357 23,660

Income tax payable (28) - -

Impairment of goodwill 12,921 - 4,142

Tax (credit)/charge (184,648) 35,022 72,604

The tax rate in Tanzania is 30% (2012: 30%) and in South Africa 28% (2012: 28%).

Tax periods remain open to review by the Tanzania Revenue Authority (“TRA”) in respect of income taxes for 5 years following the date of the filling 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. The Group has previously accounted for an adjustment to unrecognised tax benefits in respect of tax losses to reflect uncertainty regarding recoverability of certain tax losses. The Group makes no further provision in respect of such tax assessments. 11. (LOSS)/EARNINGS PER SHARE

Basic (loss)/earnings per share (“EPS”) is calculated by dividing the net (loss)/profit for the period attributable to owners of the

Company by the weighted average number of Ordinary Shares in issue during the period.

Diluted (loss)/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.

At 30 June 2013, 30 June 2012 and 31 December 2012, (loss)/earnings per share have been calculated as follows:


For the year ended

31 December



(Loss)/earnings (Loss)/profit from continuing operations attributable to owners of the

parent (701,230) 73,709 62,780

Weighted average number of Ordinary Shares in issue 410,085,499 410,085,499 410,085,499

Adjusted for dilutive effect of:

- Stock options - - -

Weighted average number of Ordinary Shares for diluted earnings per share 410,085,499 410,085,499 410,085,499

(Loss)/earnings per share

Basic (loss)/earnings per share from continuing operations (cents) (171.0) 18.0 15.3

Dilutive (loss)/earnings per share from continuing operations (cents) (171.0) 18.0 15.3


45 LSE: ABG

12. DIVIDENDS

The final dividend declared in respect of the year ended 31 December 2012 of US$50.4 million (US12.3 cents per share) was paid

during 2013 and recognised in the financial statements (declared in respect of the year ended 31 December 2011 and paid in

2012: US$53.7 million (US13.1 cents per share)).

13. GOODWILL AND INTANGIBLE ASSETS


(US$‟000) Goodwill

Acquired exploration and

evaluation properties Total

At 1 January, net of accumulated impairment1 170,831 107,390 278,221

Additions2 136 452 588

Impairment3 (43,069) (24,550) (67,619)

At 30 June 2013 127,898 83,292 211,190

At 30 June 2013

Cost 401,250 107,842 509,092

Accumulated impairment (273,352) (24,550) (297,902)

Net carrying amount 127,898 83,292 211,190



Acquired exploration

and evaluation properties Total


Additions - - -

Impairment - - -

At 30 June 2012 178,420 80,093 258,513

At 30 June 2012

Cost 401,114 80,093 481,207

Accumulated impairment (222,694) - (222,694)


For the year ended 31 December 2012


Acquired exploration and

evaluation properties Total


Additions 6,216 27,297 33,513

Impairment3 (13,805) - (13,805)

At 31 December 2012 170,831 107,390 278,221

At 31 December 2012

Cost 401,114 107,390 508,504

Accumulated impairment (230,283) - (230,283)


Goodwill and accumulated impairment losses by operating segments:

(US$‟000) North Mara Bulyanhulu Tulawaka Other Total


46 LSE: ABG

At 1 January 2012 21,046 121,546 13,805 22,023 178,420

At 30 June 2012 21,046 121,546 13,805 22,023 178,420

Additions2 - - - 6,216 6,216

Impairments3 - - (13,805) - (13,805)

At 31 December 2012 21,046 121,546 - 28,239 170,831

Additions2 - - - 136 136

Impairments3 (21,046) - - (22,023) (43,069)

At 30 June 2013 - 121,546 - 6,352 127,898

Cost 237,524 121,546 13,805 28,375 401,250

Accumulated impairments (237,524) - (13,805) (22,023) (273,352)

1 The Group‟s opening goodwill and acquired exploration and evaluation properties arose from Pre-IPO acquisitions by Barrick Gold Corporation and African Barrick

Gold acquisition of Tusker Gold Ltd on 27 April 2010. The goodwill allocated to the Group has been presented as if the Group acquired this business as of the

acquisition date. 2 Additions to acquired exploration and evaluation properties and goodwill relate to the additional costs related to the acquisition of African Barrick Gold Exploration

(Kenya) Limited and are provisional pending receipt of the final valuation. 3 The interim impairment review resulted in an impairment of US$21 million to goodwill in North Mara and US$22 million and US$24.6 million to goodwill and acquired

exploration and evaluation properties in Tusker/Nyanzaga respectively (2012: US$13.8 million impairment to goodwill in Tulawaka). The key assumptions to which the

calculation of fair value less costs to dispose for all CGUs are most sensitive are described in note 7. Refer to note 7 for further details.


47 LSE: ABG

14. PROPERTY PLANT AND EQUIPMENT

(Unaudited)

(US$‟000)

Plant and equipment

Mineral properties and

mine development

costs Assets under construction¹ Total


At 1 January 2013, net of accumulated depreciation and impairment 945,118 819,063 210,859 1,975,040 Additions - - 186,928 186,928 Impairments

2 (510,650) (235,975) (36,876) (783,501)

Depreciation (54,907) (35,446) - (90,353)

Transfers between categories 74,457 104,360 (178,817) -

At 30 June 2013 454,018 652,002 182,094 1,288,114

At 1 January 2013 Cost 1,475,374 1,250,088 210,859 2,936,321

Accumulated depreciation and impairment (530,256) (431,025) - (961,281)

Net carrying amount 945,118 819,063 210,859 1,975,040

At 30 June 2013 Cost 1,549,580 1,354,447 218,970 3,122,997

Accumulated depreciation and impairment (1,095,562) (702,445) (36,876) (1,834,883)


For the six months ended 30 June 2012 Restated

At 1 January 2012, net of accumulated depreciation and impairment 894,869 765,519 162,859 1,823,247

Additions - - 124,906 124,906

Change in accounting policy - 16,839 - 16,839

Disposals/write-downs (1,394) - - (1,394)

Depreciation (54,148) (21,087) - (75,235)


At 30 June 2012 Restated 889,836 812,746 185,781 1,888,363

At 1 January 2012

Cost 1,316,602 1,117,311 162,859 2,596,772


Net carrying amount 894 869 765,519 162,859 1,823,247

At 30 June 2012

Cost 1,361,372 1,185,579 185,781 2,732,732


Net carrying amount Restated 889,836 812,746 185,781 1,888,363


48 LSE: ABG

(Audited)

(US$‟000)

Plant and equipment

Mineral properties and

mine development

costs Assets under construction¹ Total

For the year ended 31 December 2012 Restated At 1 January 2012, net of accumulated depreciation

and impairment 894,869 765,519 162,859 1,823,247

Additions - - 340,295 340,295

Change in accounting policy - 11,116 - 11,116

Disposals/write-downs (4,028) - - (4,028)

Impairments2 (16,714) (14,016) - (30,730)

Depreciation (99,359) (65,501) - (164,860)


At 31 December 2012 Restated 945,118 819,063 210,859 1,975,040

At 1 January 2012 Cost 1,316,602 1,117,311 162,859 2,596,772



At 31 December 2012 Cost 1,475,374 1,250,088 210,859 2,936,321


Net carrying amount Restated 945,118 819,063 210,859 1,975,040

1 Assets under construction represents (a) sustaining capital expenditures incurred constructing tangible fixed assets related to operating mines and advance deposits made towards the purchase of tangible fixed assets; 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 The impairment relates to non-current assets at Buzwagi, North Mara and Tulawaka. Refer to note 7 for further details.

Leases

Property, plant and equipment includes 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 includes emergency back-up and spinning power generators leased at Buzwagi mine under a

three year lease agreement, with an option to purchase the equipment at the end of the lease term. The lease has been classified as

a finance lease.

Property, plant and equipment further includes drill rigs leased at Buzwagi mine under a one year rent to own lease agreement. The

lease has been classified as a finance lease.

The following amounts were included in property, plant and equipment where the Group is a lessee under a finance lease:


For the year ended

31 December


(US$‟000) 2013 2012 2012

Cost - capitalised finance leases 68,846 69,812 68,846

Accumulated depreciation (17,065) (10,865) (14,603)



49 LSE: ABG

15. 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 30 June 2013, 30 June 2012 and 31 December 2012.

Assets Liabilities

(Unaudited)

(US$‟000) Current Non-current Current Non-current Net fair

value


Currency contracts: Designated as cash flow hedges - - 1,652 - (1,652)

Interest contracts: Designated as cash flow hedges - 2,645 903 - 1,742

Currency contracts: Not designated as hedges 1,148 - 5,848 1,542 (6,242)

Commodity contracts: Not designated as hedges 3,788 - 111 24 3,653

Total 4,936 2,645 8,514 1,566 (2,499)

Assets Liabilities

(Unaudited)

(US$‟000) Current Non-

current Current Non-current Net fair

value


Commodity contracts: Designated as cash flow hedges - - 613 - (613)

Currency contracts: Not designated as hedges 747 248 8 510 477

Commodity contracts: Not designated as hedges 976 6 218 428 336

Total 1,723 254 839 938 200

Assets Liabilities

(Unaudited)

(US$‟000) Current Non-current Current Non-current Net fair

value

For the year ended 31 December 2012

Currency contracts: Designated as cash flow hedges 1,238 216 - - 1,454

Currency contracts: Not designated as hedges 368 54 494 145 (217)

Commodity contracts: Not designated as hedges 601 197 (65) 149 714

Total 2,207 467 429 294 1,951

16. BORROWINGS

At the beginning of the year, a US$142 million facility was put in place to fund the bulk of the costs of the construction of one of our

key growth projects, the Bulyanhulu CIL Expansion project(“Project”). The Facility is secured upon the Project, has a term of seven

years and when drawn the spread over Libor will be 250 basis points. The Facility is repayable in equal instalments over the term

of the Facility, after a two year repayment holiday period. US$80 million was drawn in the first six months of 2013. The interest rate

has been fixed at 3.6% through the use of an interest rate swap.


50 LSE: ABG

17. COMMITMENTS AND CONTINGENCIES

The Group is subject to various laws and regulations which, if not observed, could give rise to penalties. As at 30 June 2013, the

Group has the following commitments and/or contingencies:

a) Legal and tax-related contingencies

As at 30 June 2013, the Group was a defendant in approximately 254 lawsuits. The plaintiffs are claiming damages and interest

thereon for the loss caused by the Group due to one or more of the following: unlawful eviction, termination of services, wrongful

termination of contracts of service, non-payment for services, defamation, negligence by act or omission in failing to provide a safe

working environment, unpaid overtime and public holidays compensation.

The total amounts claimed from lawsuits in which specific monetary damages are sought amounted to US$73.3 million. The

Group‟s Legal Counsel is defending the Group‟s current position, and the outcome of the lawsuits cannot presently be determined.

However, in the opinion of the Directors and Group‟s Legal Counsel, no material liabilities are expected to materialise from these

lawsuits. Consequently no provision has been set aside against the claims in the books of account.

Included in the total amounts claimed of US$73.3 million are the following:

Legal contingencies:

A claim of US$2.8 million against North Mara Gold Mine being compensation for uncaused improvements, disturbance and accommodation allowance, rich gold land current value, interest and costs. Management are of the opinion that the defence is likely to succeed.

A claim of US$10 million against African Barrick Gold Exploration Limited – Tanzania and Sub-Sahara Resources (Tanzania) Limited being for breach of contract and trespassing on land where licences have been issued to the companies. Management are of the opinion that the defence is likely to succeed.

A claim against ABG in relation to the termination of a lease agreement in Dar es Salaam. The plaintiffs claim payment of US$11.4 million purportedly being rent for the remainder of the lease period, rent that they would have received from other prospective tenants, costs incurred for alterations made on ABG‟s instructions and general damages. Management are of the opinion that the defence is likely to succeed.

Tax-related contingencies:

There is a dispute against a tax demand issued on 20 June 2011 for US$21.3 million for what is alleged by the TRA to be corporation tax on gains for selling the Nyanzaga mining asset. It was agreed that BUK HoldCo Limited (“BUK”) purchased the asset from an Australian Company namely Tusker Gold Limited. BUK is wholly owned by ABG plc. Following the decision of the Board, the TRA appealed to the Tax Tribunal. The Tax Appeals Tribunal confirmed that the decision of the Tax Appeals Board was correct. The TRA has served a notice of intention to appeal to the Court of Appeal of Tanzania, a third and final appeal.

18. 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 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 30 June 2013 the Group had no loans of a funding nature due to or from related parties (30 June 2012: zero; 31 December

2012: zero).

19. SUBSEQUENT EVENTS

The Board of the Company has approved an interim dividend of 1.0 cent per share for this financial year to be paid on 23 September 2013 to shareholders on the register on 30 August 2013.


51 LSE: ABG

african barrick gold plc (“abg’’) reports half year 2013 ...€¦ · 30/07/2013 · results...

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