TIDMACA
21 October 2015
Results for the three months ended 30 September 2015 (Unaudited)
Based on IFRS and expressed in US Dollars (US$)
Acacia Mining plc ("Acacia") reports third quarter 2015 results
"As previously communicated, we had a challenging third quarter, with short
term issues impacting Bulyanhulu and Buzwagi. Whilst North Mara again performed
well, group production of 163,888 ounces was lower than the previous quarter
and means we expect to fall short of our original plans for 2015", said Brad
Gordon, Chief Executive Officer of Acacia. "Over the past two years we have
made significant changes to the business to lay the foundation for improved and
consistent operational delivery. Although Q3 was disappointing, it does not
alter our confidence that we are close to completing the turnaround. We have
addressed each of the issues that impacted the business in Q3 to ensure they do
not re-occur and, importantly, key underlying metrics at Bulyanhulu are on
track to sustain a step-up in production in Q4 2015. As announced in early
October we now expect to deliver full year production at around the level
achieved in 2014 (718,651 ounces), with cash costs and AISC expected to be
around 5% above the top of their initial respective guidance ranges of
US$695-725 per ounce sold and US$1,050-1,100 per ounce sold for the full year."
Operational Highlights
* Q3 2015 gold production of 163,888 ounces, 14% lower than Q3 2014, with
gold sales of 167,116 ounces
* Q3 2015 AISC1 of US$1,195 per ounce sold, 9% higher than Q3 2014 and 4%
higher than Q2 2015 due to the impact of the lower production base
* Q3 2015 cash costs1 of US$807 per ounce sold, 19% higher than Q3 2014
* Entered into an earn-in joint venture agreement with OreCorp Limited to
progress the Nyanzaga project in Tanzania whilst retaining exposure to
future potential upside
Financial Highlights
* Q3 2015 revenue of US$193 million, 20% lower than Q3 2014, due to the lower
gold price and lower sales ounces
* Q3 2015 EBITDA1,2 of US$21 million, 73% below Q3 2014, primarily due to
lower revenues and higher cost base
* Q3 2015 net loss2 of US$13 million (US3.2 cents per share)
* Operational cash flow of US$4 million, a 96% decrease from Q3 2014
* Capital expenditure of US$51 million, 37% lower than Q3 2014
* Cash position decreased during Q3 2015 by US$61 million, to stand at US$226
million as at 30 September 2015
Three months ended 30 Nine months ended 30
September September
(Unaudited) 2015 2014 2015 2014
Gold production (ounces) 163,888 190,986 531,189 537,567
Gold sold (ounces) 167,116 178,490 522,586 509,437
Cash cost (US$/ounce)1 807 679 789 727
AISC (US$/ounce)1 1,195 1,098 1,153 1,111
Average realised gold price (US$/ 1,113 1,268 1,172 1,282
ounce)1
(in US$'000)
Revenue 192,682 240,878 639,463 686,387
EBITDA 1,2 20,515 75,835 117,403 207,456
Net (loss)/earnings2 (13,053) 28,444 1,712 69,266
Basic (loss)/earnings per share (3.2) 6.9 0.4 16.9
(EPS) (cents)2
Cash generated from operating 4,262 101,428 111,355 228,535
activities2
Capital expenditure3 51,356 81,251 134,413 195,995
Cash balance 286,728 286,728
226,373 226,373
Total borrowings 127,800 142,000 127,800 142,000
1 These are non-IFRS measures. Refer to page 10 for definitions
2 EBITDA, net (loss)/earnings, (loss)/earnings per share and cash generated
from operating activities include continuing and discontinued operations in
2014
3 Excludes non-cash capital adjustments (reclamation asset adjustments) and
includes finance lease purchases
Other Developments
Indirect taxes
The devaluation of the Tanzanian shilling has continued to have a negative
effect on our shilling denominated indirect tax receivables. Over the third
quarter, the Tanzanian shilling lost a further 6% of its value against the US
dollar, in addition to the 17% devaluation over the first half of the year.
This resulted in a foreign exchange revaluation loss for the quarter of US$6
million, which impacts EBITDA and earnings.
During the third quarter, we received gross indirect tax refunds of US$18
million from the Government of Tanzania, but saw a net cash outflow of indirect
tax of US$10 million, prior to currency adjustments. We continue to engage with
the Government on this matter in order to increase the rate of refunds and
reduce the outstanding balance. As at 30 September 2015, the outstanding amount
relating to the total indirect tax receivable, not covered by the 2011
Memorandum of Settlement, stood at US$57 million.
Earn-in agreement entered into for Nyanzaga
In September 2015, Acacia announced the formation of an earn-in joint venture
with OreCorp Limited ("OreCorp") to progress the Nyanzaga Project (the
"Project") in Tanzania. OreCorp will act as manager of the Project and will be
able to earn up to a 25% ownership of the Project through the completion of
various work programme milestones over a three year period for an aggregate
project investment of US$15 million, including an up-front payment to Acacia of
US$1 million which has been received after the period end.
The formation of the earn-in joint venture with OreCorp allows the Project to
be reassessed and then progressed through to the completion of a Definitive
Feasibility Study ("DFS") by a dedicated team who have experience in delivering
value from large scale projects in Tanzania and across Africa, whilst allowing
Acacia the optionality to maintain a 75% stake in the project once it gets to a
development decision.
Outlook
As previously announced, several short-term factors negatively affected
production at Bulyanhulu and Buzwagi over the third quarter resulting in lower
than expected production levels. North Mara performed in line with
expectations. We continue to expect a stronger fourth quarter performance, with
production increases at all three mines.
With the increase in fourth quarter production, we expect to deliver full year
production at around the level achieved in 2014 (718,651 ounces), compared to
the initial guidance range of 750,000-800,000 ounces. With respect to cash
costs and AISC, we now expect these to be around 5% above the top of their
initial respective guidance ranges of US$695-725 per ounce sold and
US$1,050-1,100 per ounce sold for the full year.
In light of the lower gold price environment we are redoubling our efforts to
further remove costs from the business in order to return to free cash
generation. These initiatives will also be incorporated into annual life of
mine planning which is currently underway.
Key statistics
Three months ended 30 Nine months ended 30
September September
(Unaudited) 2015 2014 2015 2014
Tonnes mined (thousands of 10,787 11,016 31,262 30,908
tonnes)
Ore tonnes mined (thousands of 2,584 1,981 7,489 5,889
tonnes)
Ore tonnes processed (thousands 2,296 2,238 6,855 6,008
of tonnes)
Process recovery rate (percent) 85.7% 87.9% 87.3% 88.9%
Head grade (grams per tonne) 2.6 3.0 2.8 3.1
Gold production (ounces) 163,888 190,986 531,189 537,567
Gold sold (ounces) 167,116 178,490 522,586 509,437
Copper production (thousands of 2,993 4,531 10,485 10,961
pounds)
Copper sold (thousands of 2,770 4,242 9,598 9,633
pounds)
Cash cost per tonne milled (US$ 59 54 60 62
/t)1,3
Per ounce data
Average spot gold price2 1,124 1,282 1,178 1,288
Average realised gold 1,113 1,268 1,172 1,282
price1
Total cash cost1 807 679 789 727
All-in sustaining cost1 1,195 1,098 1,153 1,111
Average realised copper price 2.04 3.14 2.45 3.10
(US$/lb)
Financial results
Three months ended 30 Nine months ended 30
September September
(Unaudited, in US$'000 unless 2015 2014 2015 2014
otherwise stated)
Revenue 192,682 240,878 639,463 686,387
Cost of sales (173,711) (164,072) (537,293) (496,546)
Gross profit 18,971 76,806 102,170 189,841
Corporate administration (8,857) (8,436) (27,147) (22,411)
Share-based payments 2,469 (1,055) (5,821) (5,972)
Exploration and evaluation costs (6,017) (2,958) (14,753) (13,953)
(MORE TO FOLLOW) Dow Jones Newswires
October 21, 2015 02:00 ET (06:00 GMT)
Corporate social responsibility (4,230) (3,068) (9,534) (7,375)
expenses
Other charges4 (14,102) (13,630) (25,907) (26,412)
(Loss)/profit before net finance (11,766) 47,659 19,008 113,718
expense and taxation
Finance income 426 309 1,126 939
Finance expense (3,253) (2,357) (9,729) (6,861)
(Loss)/profit before taxation (14,593) 45,611 10,405 107,796
Tax expense 1,540 (17,167) (8,693) (39,883)
Net (loss)/profit from (13,053) 28,444 1,712 67,913
continuing operations
Discontinued operations:
Net profit from discontinued - - - 886
operations
Net (loss)/profit for the period (13,053) 28,444 1,712 68,799
Attributable to:
Owners of the parent (net (13,053) 28,444 1,712 69,266
(loss)/earnings)
- Continuing operations (13,053) 28,444 1,712 67,913
- Discontinued operations - - - 1,353
Non-controlling interests - - - (467)
- Discontinued operations - - - (467)
1 These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to "Non IFRS measures" on page 10 for definitions.
2 Reflect the London PM fix price.
3 Cash cost per tonne milled excluding the reprocessing of tailings at
Bulyanhulu amounted to US$69 per tonne for the quarter and US$68 for the nine
months ended 30 September 2015.
4 Other charges includes non-operational items including foreign exchange
losses of US$7.8 million (US$23.0 million YTD), legal fees of US$1.7 million
(US$4.6 million YTD), and unrealised non-hedge derivative losses of US$2.9
million (gains of US$2.7 million YTD).
*Reported process recovery rates and head grade include tailings retreatment at
Bulyanhulu. Excluding the impact of the tailings retreatment Q3 and nine months
ended 30 September 2015 process recovery would be 89.4% for both the quarter
and year to date, with Q3 and nine months ended 30 September 2015 head grade
being 2.9g/t and 3.0g/t respectively.
For further information, please visit our website: http://www.acaciamining.com/
or contact:
Acacia Mining plc +44 (0) 207 129 7150
Brad Gordon, Chief Executive Officer
Andrew Wray, Chief Financial Officer
Giles Blackham, Investor Relations Manager
Bell Pottinger +44 (0) 203 772 2500
Daniel Thöle
About Acacia Mining plc
Acacia Mining plc (LSE:ACA), formerly African Barrick Gold, is Tanzania's
largest gold miner and one of the largest producers of gold in Africa. We have
three producing mines, all located in Northwest Tanzania: Bulyanhulu, Buzwagi,
and North Mara and a portfolio of exploration projects in Tanzania, Kenya,
Burkina Faso and Mali.
Our approach is focused on strengthening our three core pillars; our business,
our people and our relationships, whilst continuing to invest in our future.
Our name change from African Barrick Gold to Acacia reflects a new approach to
mining, and an ambition to create a leading African Company.
Acacia is a UK public company headquartered in London. We are listed on the
Main Market of the London Stock Exchange with a secondary listing on the Dar es
Salaam Stock Exchange. Barrick Gold Corporation remains our majority
shareholder. Acacia reports in US dollars and in accordance with IFRS as
adopted by the European Union, unless otherwise stated in this report.
Conference call
A conference call will be held for analysts and investors on 21 October 2015 at
9.00am London time.
The access details for the conference call are as follows:
Participant dial + 44 20 3059 8125
in:
Password: ACA Q3
A recording of the conference call will be available on our website http://
www.acaciamining.com/ after the call.
FORWARD- LOOKING STATEMENTS
This report includes "forward-looking statements" that express or imply
expectations of future events or results. Forward-looking statements are
statements that are not historical facts. These statements include, without
limitation, financial projections and estimates and their underlying
assumptions, statements regarding plans, objectives and expectations with
respect to future production, operations, costs, projects, and statements
regarding future performance. Forward-looking statements are generally
identified by the words "plans," "expects," "anticipates," "believes,"
"intends," "estimates" and other similar expressions.
All forward-looking statements involve a number of risks, uncertainties and
other factors, many of which are beyond the control of Acacia, which could
cause actual results and developments to differ materially from those expressed
in, or implied by, the forward-looking statements contained in this report.
Factors that could cause or contribute to differences between the actual
results, performance and achievements of Acacia include, but are not limited
to, changes or developments in political, economic or business conditions or
national or local legislation or regulation in countries in which Acacia
conducts - or may in the future conduct - business, industry trends,
competition, fluctuations in the spot and forward price of gold or certain
other commodity prices (such as copper and diesel), currency fluctuations
(including the US dollar, South African rand, Kenyan shilling and Tanzanian
shilling exchange rates), Acacia's ability to successfully integrate
acquisitions, Acacia's ability to recover its reserves or develop new reserves,
including its ability to convert its resources into reserves and its mineral
potential into resources or reserves, and to process its mineral reserves
successfully and in a timely manner, Acacia's ability to complete land
acquisitions required to support its mining activities, operational or
technical difficulties which may occur in the context of mining activities,
delays and technical challenges associated with the completion of projects,
risk of trespass, theft and vandalism, changes in Acacia's business strategy
including, the ongoing implementation of operational reviews, as well as risks
and hazards associated with the business of mineral exploration, development,
mining and production and risks and factors affecting the gold mining industry
in general. Although Acacia's management believes that the expectations
reflected in such forward-looking statements are reasonable, Acacia cannot give
assurances that such statements will prove to be correct. Accordingly,
investors should not place reliance on forward-looking statements contained in
this report.
Any forward-looking statements in this report only reflect information
available at the time of preparation. Subject to the requirements of the
Disclosure and Transparency Rules and the Listing Rules or applicable law,
Acacia explicitly disclaims any obligation or undertaking publicly to update or
revise any forward-looking statements in this report, whether as a result of
new information, future events or otherwise. Nothing in this report should be
construed as a profit forecast or estimate and no statement made should be
interpreted to mean that Acacia's profits or earnings per share for any future
period will necessarily match or exceed the historical published profits or
earnings per share of Acacia.
Third Quarter Review
During the third quarter of 2015, we saw disappointing operational performance
at Bulyanhulu and Buzwagi leading to group production of 163,888 ounces, a 14%
decrease from the same period in 2014, with sales volumes exceeding production
by 2% at 167,116 ounces. All-in sustaining costs per ounce sold ("AISC")
increased by 9% to US$1,195 per ounce sold, mainly as a result of the impact of
lower production on fixed operational spending and investments in the areas of
maintenance and contracted underground development costs incurred to improve
future operational performance.
Bulyanhulu saw a 2% decrease in production to 62,188 ounces mainly due to
delays in opening new high grade long-hole stopes, which led to reduced head
grade and lower ore tonnes mined than planned. A specialist contractor has been
brought in to undertake the stope opening process, which will ensure sufficient
long-hole stopes are available as we move into Q4 2015. Production attributable
to underground mining amounted to 54,804 ounces, 6% lower than in the same
period in 2014. Production attributable to reprocessed tailings was 7,384
ounces, 45% higher than the same period in 2014. AISC increased by 2% to
US$1,373 per ounce sold driven by increased sustaining capital expenditure and
increased contractor services costs related to underground development, in
combination with the lower production base.
At North Mara, we continued to deliver against plan, with a step up in
underground ore tonnes and grade delivered, with approximately 22,600 contained
ounces mined for the quarter compared to 6,800 contained ounces mined in Q2
2015. Overall, North Mara produced 67,738 ounces, a 5% increase from Q3 2014 as
a result of increased grade and improved recovery rates, at AISC of US$939 per
ounce sold, 7% lower than Q3 2014.
At Buzwagi, gold production of 33,961 ounces for the three months was 46% lower
than 2014, driven by the mining of lower than planned grades together with
reduced mill throughput as a result of extended crusher downtime in September
and an unplanned SAG mill re-line. AISC of US$1,394 per ounce sold was 47%
higher than in 2014, mainly as a result of the impact of lower production on
the fixed cost base.
(MORE TO FOLLOW) Dow Jones Newswires
October 21, 2015 02:00 ET (06:00 GMT)
Total tonnes mined during the quarter amounted to 10.8 million tonnes, a 2%
decrease from Q3 2014, while ore tonnes mined of 2.6 million tonnes were 30%
higher than in Q3 2014 due to changes in mine plans driving increased ore
tonnes moved, mainly at Buzwagi.
Our cash costs for the quarter were 19% higher than in Q3 2014, and amounted to
US$807 per ounce sold. The increase was primarily due to:
* Lower capitalisation of mining expenditure due to lower waste stripping at
Buzwagi (US$83/oz);
* Lower production base and related lower co-product revenue (US$69/oz); and
* Increased contracted services costs driven by development contractor
activity at Bulyanhulu and North Mara (US$42/oz).
Partly offset by:
* Lower energy and fuel costs due to lower oil prices, partially offset by
losses on economic fuel hedge contracts (US$40/oz); and
* Lower labour costs due to a reduction in international employees and
savings associated with the local workforce given the devaluation of the
Tanzanian shilling (US$39/oz).
AISC of US$1,195 per ounce sold for the quarter was 9% higher than in Q3 2014,
predominantly due to higher cash costs as described above and increased
sustaining capital expenditures which were in part offset by lower capitalised
development expenses and lower share based payment expenses.
Cash generated from operating activities for the quarter amounted to US$4
million, US$97 million lower than in 2014 mainly due to lower EBITDA and
increased working capital outflows. Working capital outflows of US$21 million
for the quarter consisted mainly of a decrease in payables (US$13 million), an
increase in metals inventory (US$9 million), cash outflows associated with
indirect tax (US$10 million), offset by a decrease in trade receivables (US$8
million).
Capital expenditure for the quarter amounted to US$51.4 million compared to
US$81.3 million in 2014, with the decrease mainly driven by planned lower
expansionary capital spend and lower capitalised stripping at Buzwagi. Lower
capitalised stripping at North Mara was offset by increased capitalised
development driven by the investment in the Gokona underground development.
Capital expenditure primarily comprised of capitalised development expenditure
(US$28.0 million), investment in mobile equipment and component change-outs of
US$13.3 million and investment in tailings and infrastructure of US$6.2
million.
Mine Site Review
Bulyanhulu
Key statistics
Three months ended Nine months ended 30
30 September September
(Unaudited) 2015 2014 2015 2014
Key operational information:
Ounces produced oz 62,188 63,333 195,329 168,753
Ounces sold oz 64,132 51,409 186,108 152,574
Cash cost per ounce sold1 US$/oz 836 752 859 828
AISC per ounce sold1 US$/oz 1,373 1,350 1,362 1,283
Copper production Klbs 1,465 1,488 4,534 3,919
Copper sold Klbs 1,327 1,153 3,865 3,500
Run-of-mine:
Underground ore tonnes hoisted Kt 237 236 701 664
Ore milled Kt 236 236 715 661
Head grade g/t 8.3 8.8 8.5 8.6
Mill recovery % 87.8% 87.1% 88.4% 89.9%
Ounces produced oz 54,804 58,236 173,170 163,383
Cash cost per tonne milled1 US$/t 208 162 205 191
Reprocessed tailings:
Ore milled Kt 408 220 988 227
Head grade g/t 1.2 1.4 1.2 1.4
Mill recovery % 45.4% 52.5% 56.6% 53.8%
Ounces produced oz 7,384 5,097 22,159 5,370
Capital Expenditure
- Sustaining capital US$('000) 15,779 8,970 32,234 13,452
- Capitalised development US$('000) 14,227 17,527 48,267 45,941
- Expansionary capital US$('000) (282) 15,907 (1,191) 41,738
29,724 42,404 79,310 101,131
- Non-cash reclamation asset US$('000) (1,381) (2,399) (1,788) 6,322
adjustments
Total capital expenditure US$('000) 28,343 40,005 77,522 107,453
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to 'Non-IFRS measures" on page 10 for definitions.
Operating performance
Gold production for the quarter of 62,188 ounces was 2% lower than the same
period in 2014. The reduced output was primarily due to delays in opening new
high grade long-hole stopes, which led to reduced head grade and lower ore
tonnes mined than planned. A specialist contractor has been brought in to
undertake the stope opening process, which will ensure that sufficient
long-hole stopes are available as we move into Q4 2015.
Recoveries have been impacted by the lower grade together with instability in
the plant caused by power interruptions and contamination of the elution
circuit, which have both now largely been resolved. Furthermore, in order to
better manage long term recoveries and processing costs we are looking at
options to separate the run of mine and the reclaimed tailings streams within
the CIL circuit.
Production attributable to underground mining amounted to 54,804 ounces, 6%
lower than in the same period in 2014. Production attributable to reprocessed
tailings was 7,384 ounces, 45% higher than the same period in 2014 due to
increased throughput from the new CIL circuit. Gold sold for the quarter
amounted to 64,132 ounces, 3% higher than production due to the sale of opening
ounces on hand at the beginning of the quarter. Copper production of 1.5
million pounds for the quarter was in line with Q3 2014.
Cash costs for the quarter of US$836 per ounce sold were 11% higher than the
same period in 2014 (US$752). Cash costs were driven by the lower production
base, combined with increased costs relating to the use of a development
contractor and lower capitalisation of mining costs. These factors were
partially offset by lower labour costs due to a lower international employee
headcount and the impact of a devaluation of the Tanzanian shilling on local
labour costs.
AISC per ounce sold for the quarter of US$1,373 was 2% higher than in Q3 2014
(US$1,350) driven by the higher cash cost described above and increased
sustaining capital expenditure mainly relating to investments in equipment,
tailings infrastructure and underground ventilation.
Whilst production at Bulyanhulu was disappointing in the quarter, it did not
reflect the continuing improvement in the operating environment at the mine. We
have maintained the improvements in development rates and long-hole stoping
widths over the quarter, with the changed procedures regarding long-hole stope
openings leading to improved stope availability towards the end of September.
We remain confident that the fourth quarter will see Bulyanhulu demonstrate the
benefits from the sustainable underlying operating improvements already made at
the mine.
Capital expenditure for the quarter before reclamation adjustments amounted to
US$29.7 million, 30% lower than the 2014 expenditure of US$42.4 million, mainly
driven by lower expansionary capital spend on the new CIL circuit and lower
capitalised development spend, partially offset by increased sustaining spend.
Capital expenditure consisted mainly of capitalised underground development
costs (US$14.2 million), investments in equipment (US$9.5 million) and
investments in tailings and infrastructure (US$3.3 million). The credit in
expansionary capital expenditure relates to the reversal of amounts accrued on
2014 expansionary capital projects.
Buzwagi
Key statistics
Three months ended Nine months ended 30
30 September September
(Unaudited) 2015 2014 2015 2014
Key operational information:
Ounces produced oz 33,961 63,321 125,976 165,665
Ounces sold oz 33,590 65,641 125,078 158,083
Cash cost per ounce sold1 US$/oz 1,197 645 1,028 782
AISC per ounce sold1 US$/oz 1,394 950 1,171 1,078
Copper production Klbs 1,528 3,043 5,951 7,042
Copper sold Klbs 1,444 3,089 5,734 6,133
Mining information:
Tonnes mined Kt 6,523 6,286 19,416 17,632
Ore tonnes mined Kt 1,518 1,090 4,226 3,444
Processing information:
Ore milled Kt 938 1,054 3,025 3,034
Head grade g/t 1.2 2.0 1.4 1.8
Mill recovery % 93.6% 94.8% 93.8% 92.0%
Cash cost per tonne milled1 US$/t 43 40 42 41
Capital Expenditure
- Sustaining capital US$('000) 2,980 2,816 8,114 8,592
- Capitalised development US$('000) 1,137 13,441 1,480 28,598
4,117 16,257 9,594 37,190
- Non-cash reclamation US$('000) 1,577 (652) 1,493 187
asset adjustments
(MORE TO FOLLOW) Dow Jones Newswires
October 21, 2015 02:00 ET (06:00 GMT)
Total capital expenditure US$('000) 5,694 15,605 11,087 37,377
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to "Non-IFRS measures" on page 10 for definitions.
Operating performance
Gold production for the quarter of 33,961 ounces was 46% lower than Q3 2014, as
production was impacted by the mining of lower than planned grades together
with 11% lower mill throughput as a result of extended crusher downtime in
September and an unplanned SAG mill re-line. Gold sold for the quarter amounted
to 33,590 ounces, in line with production.
Total tonnes mined for the quarter of 6.5 million tonnes were 4% higher than in
Q3 2014. Mining during the quarter was primarily focused on lower grade splay
areas within the open pit; however negative grade reconciliations from a higher
grade zone, combined with limited flexibility resulting from slower than
planned waste movement led to mining below reserve grade for the quarter. The
mine focused on additional waste movement in late September which will continue
into early Q4 2015 in order to increase access to higher grade areas and lead
to a step-up in production. Copper production of 1.5 million pounds for the
quarter was 50% lower than in Q3 2014 driven by lower throughput and grades.
Cash costs for the quarter of US$1,197 per ounce sold were 86% higher than in
Q3 2014 (US$645). Cash costs were primarily impacted by lower production, lower
capitalisation of mining costs given the lower strip ratio and lower co-product
revenue due to lower copper sales. This was partially offset by lower energy
and fuel costs due to lower oil prices, lower sales related costs due to lower
sales volumes and lower labour costs driven by a decrease in international
employees and the impact of the devaluation of the Tanzanian shilling on local
labour costs.
AISC per ounce sold for the quarter of US$1,394 was 47% higher than in Q3 2014
(US$950). This was mainly driven by the higher cash costs together with the
impact of the lower sales volumes, partly offset by the lower capitalised
development expenditure as discussed above.
Capital expenditure for the quarter of US$4.1 million before reclamation
adjustments was 75% lower than in Q3 2014 (US$16.3 million). This was mainly
due to mining taking place in the final stage of the open pit which reduces
waste mining and resulted in lower capitalised stripping costs. Key capital
expenditure for the quarter consists of component change out costs (US$1.5
million) and investments in tailings and infrastructure of US$1.4 million.
North Mara
Key statistics
Three months ended 30 Nine months ended 30
September September
(Unaudited) 2015 2014 2015 2014
Key operational information:
Ounces produced oz 67,738 64,332 209,884 203,148
Ounces sold oz 69,395 61,440 211,400 198,780
Cash cost per ounce sold1 US$/oz 591 655 585 606
AISC per ounce sold1 US$/oz 939 1,015 908 961
Open pit:
Tonnes mined Kt 3,922 4,494 10,977 12,612
Ore tonnes mined Kt 787 655 2,394 1,781
Mine grade g/t 2.3 3.4 2.6 3.6
Underground:
Ore tonnes trammed Kt 105 - 168 -
Mine grade g/t 6.7 - 5.8 -
Processing information:
Ore milled Kt 716 721 2,128 2,086
Head grade g/t 3.3 3.2 3.5 3.5
Mill recovery % 88.7% 87.2% 87.8% 87.3%
Cash cost per tonne milled1 US$/t 57 56 58 58
Capital Expenditure
- Sustaining capital US$('000) 4,417 4,994 7,454 13,082
- Capitalised development US$('000) 12,638 10,834 36,571 36,226
- Expansionary capital US$('000) 33 6,544 962 7,522
17,088 22,372 44,987 56,830
- Non-cash reclamation asset US$('000) 2,476 (1,574) 2,270 3,784
adjustments
Total capital expenditure US$('000) 19,564 20,798 47,257 60,614
1These are non-IFRS financial performance measures with no standard meaning
under IFRS. Refer to "Non-IFRS measures" on page 10 for definitions.
Operating performance
Production for the quarter of 67,738 ounces was 5% higher than the prior year
period as a result of a 3% higher head grade due to higher grade ore delivered
from underground more than offsetting the lower open pit grade from Nyabirama.
As expected, mined grade from the underground operation increased from 3.9g/t
in Q2 2015 to 6.7g/t in Q3 2015 due to the increased proportion of stoping ore
of total underground ore production. We expect this trend to continue into the
fourth quarter. Gold ounces sold for the quarter of 69,395 ounces were 2%
higher than production, and 13% higher than the prior year due to the higher
production base. Open pit mined grade decreased due to an increased proportion
of ore being sourced from the lower grade Nyabirama pit.
Cash costs for the quarter of US$591 per ounce sold were 10% lower than Q3 2014
(US$655). Lower fuel costs, lower labour costs driven by the impact of the
devaluation of the Tanzanian shilling on local labour costs and the higher
production base were partly offset by increased contracted services costs as a
result of the ramp-up of the Gokona Underground.
AISC per ounce sold for the quarter of US$939 was 7% lower than in Q3 2014
(US$1,015) primarily due to the impact of increased sales volumes and lower
cash costs.
Capital expenditure for the quarter, before reclamation adjustments, of US$17.1
million was 24% lower than in 2014 (US$22.4 million). Key capital expenditure
included capitalised stripping costs (US$8.7 million), capitalised underground
development costs (US$3.9 million), investment in tailings and infrastructure
(US$1.5 million) and component costs (US$2.9 million). In addition, US$0.3
million was spent on land acquisitions primarily around the Nyabirama open pit.
Land acquisition costs of US$0.3 million are excluded from the capital
expenditure above as they are recognised as long term prepayments, but are
included in AISC.
Exploration Review
Tanzania
Bulyanhulu - Near-mine Extensions
In Q3 2015 we continued a programme of diamond drilling and commenced a
programme of Aircore reconnaissance drilling testing for new Bulyanhulu-style
reef systems and extensions of known vein structures within a 3-4 kilometre
radius of the mine to potentially identify new ore sources within trucking
distance of the Bulyanhulu processing plant. By the end of Q3, a total of 8
core holes for approximately 2,500 metres of diamond core and 275 Aircore holes
for approximately 11,000 metres were completed across four target regions,
namely, the Safari, NW Extensions, Nose Zone and Central East targets.
Results of the Aircore drilling and diamond core drilling are expected to be
received and compiled in Q4 2015 in order to determine follow-up programmes.
Kenya
West Kenya Joint Venture Projects
During Q3 2015 we commenced a diamond core drilling programme designed to
follow up on the positive results from the initial drilling programme on the
Liranda Corridor within the Kakamega Dome gold camp. The planned programme
consists of nine deeper drill holes for a total of approximately 6,500 metres
with the objective of testing for down-plunge and down-dip extensions of
previously intersected gold mineralisation within interpreted shoots below 400
metres vertical. The follow-up programme commenced late in Q3 2015 with 3 holes
completed at quarter-end, and all holes intersecting multiple zones of
silica-sericite-fuchsite-(roscoelite)-pyrite-sphalerite alteration and
associated quartz veining, but with full assays not yet received. We expect to
complete this phase of the diamond core programme in late Q4 2015.
In the Lake Zone gold camp, we commenced a reverse circulation (RC) drilling
programme to test gold-in-soil anomalies and co-incident IP chargeability
anomalies at Masumbi-Barding and Yala target areas during late Q3 2015, with
results of this phase of drilling expected during Q4 2015.
Additionally, in the Lake Zone gold camp, results from the seven diamond drill
holes undertaken during Q2 to test the Kitson target were received during Q3,
with positive results including:
* KTD002: 9.5m @ 5.09 g/t Au from 59m
* KTD004: 9.5m @ 1.91 g/t Au from 91m
* KTD005: 8.0m @ 1.82 g/t Au from 56m
A review of Kitson and drilling of Kitson North will be completed over the
coming months to test the potential of the Kitson trend.
Burkina Faso
Over the past 12 months Acacia has entered into a number of joint ventures with
junior exploration companies in Burkina Faso and now has an interest in over
2,400 square kilometres across the prospective Houndé Belt. The most advanced
project is the South Houndé JV, managed by Sarama Resources, where Sarama have
previously delineated an inferred resource of 1.5 million ounces at 1.6g/t Au
at a 0.8g/t Au cut-off, along a 5.5 kilometre section of two parallel soil
anomalies that each extend for more than 10 kilometres.
The third quarter saw limited field activity across all of the projects due to
the wet season, but we expect to recommence Aircore and Reverse circulation
drilling on the South Houndé JV in November to follow up successful completion
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