14 February 2017
Results for the 12 months ended
31 December 2016 (Unaudited)
Based on IFRS and expressed in US
Dollars (US$)
Acacia Mining plc (“Acacia’’) reports
full year 2016 results
“2016 was another successful year for Acacia as we delivered
record production, reduced our all-in sustaining costs by 14% and
more than doubled our net cash position” said Brad Gordon, Chief Executive Officer of Acacia
Mining. “This excellent operational performance translated into
strong financial performance with EBITDA more than doubling to
US$415 million and adjusted net
earnings increasing to US$161
million. We continued to invest into our exploration
portfolio and are poised to announce a maiden resource on the
West Kenya project, in which we
strategically increased our interest to 100% in 2016. As a result
of this strong underlying performance in 2016, the Board of
Directors has proposed a full year dividend of 10.4 cents (final dividend of 8.4 cents) which is at the top end of our policy
and more than twice the total dividend announced for 2015
(4.2 cents). We expect 2017, driven
by the mine life extension at Buzwagi, to see further production
growth and cost reductions, with production expected to be between
850,000-900,000 ounces at an AISC of between US$880-920 per ounce.
Financial Highlights
· Revenue of US$1,054 million, 21% higher than 2015, due to a
13% increase in gold sales and a 7% higher gold price
· EBITDA1 of US$415 million, more than doubled from 2015,
mainly due to higher revenues and lower operating costs
· Net earnings of US$95 million (US23.2 cents per share), with
adjusted net earnings1 of US$161
million (US39.2 cents per share), is up from US$7 million in 2015
· Operational cash flow of US$318 million, 103% up on 2015, driven primarily
by higher EBITDA
· Proposed final dividend of US8.4 cents
per share, total 2016 dividend of US10.4 cents per share, more than
double 2015
· Net cash of US$218 million, an increase of 107% during
2016
· Cash on hand of US$318 million as at 31
December 2016, an increase of US$85
million during the year
Operational Highlights
· Gold production of 829,705 ounces, 13%
higher than 2015, with gold sales of 816,743 ounces
· Cash costs1 of US$640 per ounce sold,17% lower than 2015
· AISC1 of US$958 per ounce sold, 14% below 2015, including
a US$37 per ounce share-based payment
charge
· North Mara achieved record annual
production of 378,443 ounces at AISC of US$733 per ounce sold
· Bulyanhulu overcame significant
downtime in Q3 2016 and delivered production of 289,432 ounces, 6%
higher than 2015
· Six month extension of mining at
Buzwagi, which will lead to a 40% increase in production compared
to 2016
|
Three months ended 31 December |
Year ended 31 December |
(Unaudited) |
2016 |
2015 |
2016 |
2015 |
Gold production
(ounces) |
212,954 |
200,723 |
829,705 |
731,912 |
Gold sold
(ounces) |
209,292 |
198,617 |
816,743 |
721,203 |
Cash cost
(US$/ounce)1 |
679 |
728 |
640 |
772 |
AISC
(US$/ounce)1 |
952 |
1,004 |
958 |
1,112 |
Net average realised
gold price (US$/ounce)1 |
1,211 |
1,107 |
1,240 |
1,154 |
(in
US$'000) |
|
|
|
|
Revenue |
263,890 |
228,668 |
1,053,532 |
868,131 |
EBITDA
1 |
105,681 |
57,630 |
415,388 |
174,971 |
Adjusted
EBITDA1 |
103,010 |
59,166 |
409,903 |
180,916 |
Net
earnings/(loss) |
48,285 |
(198,860) |
94,944 |
(197,148) |
Basic earnings/(loss)
per share (EPS) (cents) |
11.8 |
(48.5) |
23.2 |
(48.1) |
Adjusted net
earnings1 |
46,415 |
2,040 |
161,021 |
6,838 |
Adjusted net earnings
per share (AEPS) (cents)1 |
11.3 |
0.5 |
39.2 |
1.7 |
Cash generated from
operating activities |
60,933 |
45,110 |
317,976 |
156,465 |
Capital
expenditure2 |
57,826 |
42,931 |
195,898 |
183,617 |
Cash balance |
317,791 |
233,268 |
317,791 |
233,268 |
Long term
borrowings |
99,400 |
127,800 |
99,400 |
127,800 |
1 These are non-IFRS measures.
Refer to page 26 for definitions
2 Excludes non-cash capital adjustments
(reclamation asset adjustments) and include finance lease purchases
and land purchases recognised as long term prepayments
CEO Statement
2016 was a landmark year for Acacia as we delivered record group
production of 829,705 ounces, which was almost 100,000 ounces ahead
of 2015. It also exceeded our initial guidance range for the year
of 750,000-780,000 ounces and revised guidance given in
October 2016, of approximately
820,000 ounces. Performance was driven by North Mara, where the
mine had a record year and at Bulyanhulu, which registered its
highest production year for ten years, testament to the work we
have undertaken to turn the asset around.
We also saw a substantial fall in our all-in sustaining costs
(AISC) to US$958 per ounce, which was
14% below 2015 levels and at the bottom of our guidance range of
US$950-980 per ounce. This was a
result of the changes that were made to the business in late 2015,
improved operating efficiencies at the assets and the increased
production profile. If we were to focus purely on asset
performance, and remove the impact of the increase in the share
price on the valuation of share based payments, our AISC would have
been US$921 per ounce, 17% below 2015
and well below our guidance range.
I was especially pleased with the return to free cash generation
during the year, which is our primary focus. Over the past twelve
months we doubled our net cash on the balance sheet to US$218 million which provides significant
flexibility for us going forward. At the same time, the success of
North Mara meant that a corporate tax charge amounting to
US$55 million was incurred, which
included a US$20 million cash
pre-payment agreed with the Tanzanian Revenue Authority in Q1
2017.
Year in Review
2016 was a very strong operational year as we saw the benefit of
the first full year of operations at the Gokona Underground at
North Mara. This deposit was previously mined as a high grade open
pit and commenced underground mining in mid-2015 after we made the
strategic decision to go underground in 2014. The mine delivered
ahead of expectations in 2016, partly due to a 61% increase in
mined grade compared to the resource model. This drove additional
ounces and the overall mine achieved a record production year of
378,443 ounces, a 32% increase over 2015. At Bulyanhulu we overcame
an extended process plant shutdown in the third quarter which led
to a loss of approximately one month of milling capacity to deliver
289,432 ounces, a 6% increase on 2015. This demonstrates the
increased operational resilience as part of our ongoing programme
to unlock the geological and operational potential of the asset. At
Buzwagi, production was behind expectations at 161,830 ounces, 5%
below 2015 as a result of lower mined grades due to a change in pit
sequencing in order to enhance operational efficiencies as part of
the extension of mining in 2017.
On the cost side, we demonstrated further improvement in AISC as
the operational efficiencies and increased production rates took
effect. North Mara was again the standout performer, with an AISC
of US$733 per ounce, which was 20%
lower than 2015 driven by the increased production base. At
Bulyanhulu, AISC fell by a further 16% to US$1,058 per ounce as a result of the
restructuring that took place in Q4 2015. At Buzwagi we saw AISC
above plan at US$1,095 per ounce due
to the lower ounce profile, though this was still 8% lower than
2015. Together, this led to a 14% fall in the headline AISC to
US$958 per ounce, over US$150 per ounce lower than 2015. On an annual
basis this now represents a 43% reduction in AISC from its peak in
2012.
The strong performance meant that we ended the year with
US$318 million of cash on our balance
sheet, an increase of US$85 million
over the previous year. This includes the US$20 million corporate tax cash pre-payment,
US$28 million on debt repayments,
US$20 million on dividends and
US$36 million on share based payments
as a result of the vesting of awards during the year. As a result,
net cash on the balance sheet more doubled from US$106 million, ending the year at US$218 million.
Total revenue for the year amounted to US$1,054 million which was 21% ahead of 2015 as a
result of the increased production profile and the US$96 per ounce higher average realised gold
price. EBITDA was similarly strong at US$415
million, up from US$175
million in 2015. We had net earnings of US$95 million, which were primary impacted by a
US$72 million provision as a result
of historic tax cases, but were still significantly ahead of 2015’s
loss of US$197 million. Adjusted net
earnings amounted to US$161 million,
which was US$154 million above
2015.
Reserves and Resources
Notwithstanding the strengthening of the gold price in 2016 we
have taken the decision to maintain the 2015 gold price assumptions
in our reserve and resource calculations. This not only brings
consistency of planning on an annual basis but it also helps
underpin the financial robustness of our long-term planning. Our
reserve pricing is maintained at US$1,100 per ounce and our resource pricing has
been maintained at US$1,400 per
ounce.
On a group basis, our overall reserves and resources declined by
4% from 28.6 million ounces to 27.5 million ounces during the year.
At our operating mines, total reserves and resources declined by
861,000 ounces, which was primarily a result of depletion. At our
exploration properties we had a marginal reduction of 112,000
ounces as a result of the inclusion of our share of the South
Houndé resource in Burkina Faso
which largely offset the change to the methodology of how we
account for the Nyanzaga joint venture resource which has been
converted from a large scale low grade resource to a smaller high
grade resource from a combined open pit and underground.
Whilst total Reserves and Resources were largely flat, Reserves
fell by 1.1 million ounces to 7.6 million ounces. In addition to
depletion, this is largely a result of the reclassification of
approximately 583,000 ounces of Reef 2 material at Bulyanhulu from
Reserves into Inferred Resources as a result of the change in the
required drill spacing for underlying resource classifications.
Prior to recent drilling programmes, the search radius for Reef 1
and Reef 2 were the same, with a 100 metre search radius around
each drill hole used for Indicated Resources (which can then be
converted into a Probable Reserve) and a 200 metre search radius
used for Inferred material. Following the recent drilling, the
variography has shown that due to the different geometries of the
Reef 2 series the 100 metre search radius is not appropriate and
has been reduced to 50 metres. This has meant that some ounces
previously classified as Probable Reserves (based on the underlying
indicated resource) have now largely been moved to Inferred
Resources. We are undertaking drilling programmes during 2017 to
reduce drill spacing in available areas to bring material back into
the Indicated categories and will continue this programme over the
coming years.
This change to the classification of Resources at Bulyanhulu,
together with depletion, has meant that Reserves in the underground
mine declined by 1.0 million ounces to 4.9 million ounces. However,
the grade of the Reserves has increased from 8.85g/t in 2015 to
9.75g/t as a result of the change to cut-off grade calculations and
the reduction in the mill reconciliation factor which had
previously been included as a result of mill performance in
2015.
At North Mara, we largely replaced Reserves in the Gokona
deposit despite mining approximately 225,000 ounces from the
underground in 2016, at a significantly higher grade than included
in the prior year Reserves declaration. This Reserves replacement
was a result of changes to the underground Grade Control model due
to our improved understanding of the ore body which included
additional stope designs. We expect to complete the technical work
to better estimate the future impact of the positive
reconciliations received during 2016 in late Q1 2017. As such
the results of this work have not yet been incorporated into the
current Reserves statement. In the Nyabirama pit we saw depletion
of 170,000 ounces during 2016, of which approximately 111,000
ounces were replaced as a result of Grade Control model updates.
Together, this led to reserves at North Mara falling by 83,000
ounces to 1.9 million ounces.
We believe that the current Reserves position at North Mara does
not reflect the potential of either of the ore bodies at the mine
and in 2017 are commencing extension programmes to identify new
resources and upgrade existing resources at both Gokona and
Nyabirama. We are targeting significant upgrades to the Reserves
and Resources at the mine over the next several years as part of
our target to produce more than 300,000 ounces per annum for at
least ten years at North Mara.
At Buzwagi, the extension of mining by a further six months led
to the inclusion of 152,000 ounces of Resources into Reserves which
meant that the mine fully replaced Reserves. Buzwagi now has 6.0
million tonnes of in-pit Reserves at 1.7 grams per tonne which will
be mined during 2017, with lower grade material stockpiled for
processing in 2018 and beyond.
Discovery
We had a very positive year in exploration and expect to
announce the maiden resource on the West Kenya Project in Q1
2017. I am confident that this will confirm that it has the
making of a very high quality asset. We will provide more details
on this as we go through the year but believe that this resource is
the first step in delineating a multi-million ounce high grade
resource in the Liranda Corridor in Kenya.
We also made progress in West
Africa and continued to expand our land package on the
highly prospective Houndé belt in Burkina
Faso. We now have a licence area of 2,700 square kilometres
through four joint ventures which provides access to 125 strike
kilometres on the belt. As part of this programme we have
completed the first stage of the earn-in on the South Houndé joint
venture with Sarama Resources and as a result now own 50% of the
joint venture and have taken over operatorship of the project. Due
to this we have consolidated 50% of the 2.1 million ounce resource
on the project into our resource statement. In Mali, we took our first steps in exploring the
licences we have acquired with promising initial results and will
continue to look to expand our land package on the Senegal-Mali
shear zone.
The joint venture with OreCorp Limited to progress our Nyanzaga
Project in Tanzania continues to
move forward. OreCorp took over management of the project for a
three year period in late 2015. This structure allows the project
to be progressed whilst giving Acacia the optionality to maintain a
75% stake in the project once it reaches a development decision.
During the year OreCorp competed a scoping study on the project
which outlined a combined open pit and underground project that
produces 2.4 million ounces of gold over a 13 year life at an AISC
of US$798/oz and requires
pre-production capital of US$248
million (inclusive of contingency). OreCorp are now
undertaking a pre-feasibility study which is due to be complete in
the coming months.
Safety
Safety performance during 2016 was disappointing as regrettably
in January 2016, one of our
contractors at North Mara passed away as a result of a haul truck
accident. We also saw an increase in our total reportable injury
frequency rate of 9% to 0.74. This was driven by an increase at
Bulyanhulu, although we saw an improvement in safety performance in
the fourth quarter at the mine. Despite these disappointing results
we did see areas of improvement, with Buzwagi’s TRIFR reducing by
44%, as we fully embedded our behavioural safety programme,
“Tunajali” or “We Care” into the business and at North Mara we saw
safety performance remaining in line with 2015 levels despite the
increased level of complexity of operations. We also saw a 46%
reduction in the number of High Potential Incidents (incidents that
could under slightly different circumstances have led to a fatality
or permanent disability). We continue to target zero injuries and
having every person going home safely every day.
Operating Environment
As a major contributor to the Tanzanian economy we were pleased
to be able to increase our contribution during 2016 through
incurring a corporate tax charge amounting to US$55 million. This was a result of the strong
performance at North Mara and included our agreement to pre-pay
US$20 million of cash corporate
taxes. Our increase in tax payments, which when added to royalties
of US$47 million, payroll taxes of
US$40 million and other taxes of
approximately US$20 million provides
a significant contribution to the Tanzanian Government’s aim of
self-funding the national budget.
During 2016 there have continued to be a number of tax cases
that are being dealt with in the court system in Tanzania which we are seeking to resolve. As
communicated earlier in the year, we recorded a tax provision of
US$69.6 million in respect of
historic capital deductions at Bulyanhulu, North Mara and Tulawaka
as a result of a Court of Appeal ruling. We are also dealing with
claims to levy taxes in Tanzania
on the UK registered Acacia Mining plc which we believe have no
basis in law given this company is tax resident and permanently
established in the UK. Given the materiality of the amounts being
claimed, we are also addressing a constructive resolution of these
issues as part of our ongoing engagement with the Tanzania Revenue
Authority (“TRA”) as well as at a senior level in the
Government.
During the year we also saw a build-up in the total indirect tax
receivables from US$110.2 million as
at 31 December 2015 to US$136.4 million as at 31
December 2016. The increase was mainly due to a significant
delay in VAT refunds in the second half of 2016 as a result of
ongoing audits by the Tanzanian Revenue Authority on submitted VAT.
We continue to engage with the TRA in order that they approve the
payment of outstanding amounts as well as returning to the
previously agreed timeline of three months for dealing with ongoing
claims for refund.
Final dividend
Our dividend policy is based on cash flow in order to ensure
that it is closely aligned with the focus on cash generation within
the business. As a result we aim to pay a dividend of between
15-30% of our operational cash flow after sustaining capital and
capitalised development but before expansion capital and financing
costs.
In line with this policy, in July we declared an interim
dividend of 2.0 cents per share,
which was a 43% increase on 2015. As a result of strong performance
in the second half of the year, we are pleased to recommend a final
dividend of 8.4 cents per share. This
represents a full year pay-out of 10.4
cents per share, or US$43
million, which is at the top of the pay-out range and more
than twice 2015. The decision to recommend a dividend at the top of
the range reflect the confidence we have in the business, the
significant free cash flow the company generated in 2016 and the
fact that we are able to fund out of free cash flow the organic
projects currently in our pipeline. We believe the distributing of
capital to our shareholders is a key differentiator for Acacia and
continues our track record of providing strong total returns to our
shareholders across the cycle.
Outlook
The group delivered another year of strong performance in 2016
and we expect that we will further improve on this in 2017 with
production increasing to between 850,000-900,000 ounces at a lower
all-in sustaining cost of between US$880-920 per ounce. Cash costs per ounce are
also expected to decline from US$640
per ounce to between US$580-620 per
ounce in 2017. We expect production to increase through the year
and as such we expect a production ratio of 45:55 in terms of the
first half versus the second half of the year, which will have a
commensurate impact on our cost profile and our cash
generation.
The further improvement in operating metrics is primarily driven
by the revision to the mine plan at Buzwagi, where mining has been
extended by approximately six months. This will lead to the mining
of approximately 2 million tonnes more of higher grade ore during
2017 than previously planned and will drive a step up of
approximately 40% in production over 2015 and a reduction in AISC
of up to 30%.
At Bulyanhulu, we expect production to be in line with the
previous year and AISC to reduce by up to 5%. We expect to see a
reduction in cash costs, but will see an increase in sustaining
capital as we invest to enhance the operation of the process plant
and undertake a targeted fleet renewal programme to improve
operating efficiencies amongst the older equipment within the
underground fleet. We also continue to invest in underground
development and in support of this will be upgrading ventilation
and paste line infrastructure as we focus on creating greater
flexibility underground. This investment in core infrastructure is
a critical element in optimising the value delivery from this
long-life, high grade asset in combination with continuing to drive
cost savings and improve mining efficiencies.
North Mara performed ahead of expectations during 2016 and as a
result we expect production to reduce by up to 10% during 2017 as
an increased proportion of underground ore is sourced from the
lower grade West Zone which will offset the impact of the increase
in underground tonnes mined. The reduction in production, together
with an increase in capital as we invest in the delivery of
increased underground mining rates, together with open pit waste
stripping will mean that AISC will increase by up to 10%.
As a result of the investments into both Bulyanhulu and North
Mara outlined above we expect to see capital expenditure in 2017 of
between US$210-230 million. This is
comprised of approximately US$75-85
million of sustaining capital, US$120-130 million of capitalised development /
stripping and US$15 million of
expansion capital, made up predominantly of capitalised drilling at
North Mara as we look to delineate additional resources to support
a 10 year life of mine producing in excess of 300,000 ounces per
annum.
As previously indicated we plan to increase our greenfield
exploration spend to approximately US$25
million, as we look to build on the excellent progress made
in Kenya during 2016 and we step
up our exploration activity in Burkina
Faso and Mali on our
expanded land packages there.
Finally, I would like to thank all of my colleagues for their
commitment, enthusiasm and hard work throughout what has been a
year of continued delivery at Acacia. We have made further progress
on the journey to making this company a leader in Africa and I am looking forward to an even
better year in 2017. I would also like to thank our Board for their
support and guidance through the year.
Brad
Gordon
Chief Executive Officer
Key
Statistics |
Three months ended 31 December |
Year ended 31 December |
(Unaudited) |
2016 |
2015 |
2016 |
2015 |
Tonnes mined
(thousands of tonnes) |
9,644 |
10,128 |
38,491 |
41,390 |
Ore tonnes mined
(thousands of tonnes) |
2,584 |
2,822 |
9,419 |
10,311 |
Ore tonnes processed
(thousands of tonnes) |
2,567 |
2,413 |
9,818 |
9,268 |
Process recovery rate
exc. tailings reclaim (percent) |
92.5% |
90.9% |
92.3% |
89.7% |
Head grade exc.
tailings reclaim (grams per tonne) |
3.2 |
3.2 |
3.3 |
3.1 |
Process recovery rate
inc. tailings reclaim (percent) |
88.9% |
87.5% |
88.5% |
87.4% |
Head grade inc.
tailings reclaim (grams per tonne) |
2.9 |
3.0 |
3.0 |
2.8 |
Gold production
(ounces) |
212,954 |
200,723 |
829,705 |
731,912 |
Gold sold
(ounces) |
209,292 |
198,617 |
816,743 |
721,203 |
Copper production
(thousands of pounds) |
4,255 |
4,496 |
16,239 |
14,981 |
Copper sold (thousands
of pounds) |
3,384 |
3,720 |
14,745 |
13,318 |
Cash cost per tonne
milled exc. tailings reclaim (US$/t)1,3 |
66 |
69 |
62 |
68 |
Cash cost per tonne
milled inc. tailings reclaim (US$/t)1,3 |
55 |
60 |
53 |
60 |
Per ounce data |
|
|
|
|
Average spot gold price2 |
1,222 |
1,106 |
1,251 |
1,160 |
Net average realised gold
price1 |
1,211 |
1,107 |
1,240 |
1,154 |
Total cash cost1 |
679 |
728 |
640 |
772 |
All-in sustaining cost1 |
952 |
1,004 |
958 |
1,112 |
Average realised
copper price (US$/lb) |
2.45 |
2.03 |
2.21 |
2.33 |
Financial results
|
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited, in US$'000
unless otherwise stated) |
2016 |
2015 |
|
2016 |
2015 |
Revenue |
263,890 |
228,668 |
|
1,053,532 |
868,131 |
Cost of sales |
(196,314) |
(196,874) |
|
(727,080) |
(734,167) |
Gross profit |
67,576 |
31,794 |
|
326,452 |
133,964 |
Corporate
administration |
(6,218) |
(7,308) |
|
(21,895) |
(34,455) |
Share based
payments |
9,795 |
284 |
|
(29,929) |
(5,537) |
Exploration and
evaluation costs |
(7,330) |
(4,984) |
|
(24,020) |
(19,737) |
Corporate social
responsibility expenses |
(3,068) |
(3,348) |
|
(10,665) |
(12,882) |
Impairment
charges |
- |
(146,201) |
|
- |
(146,201) |
Other income
(charges) |
1,208 |
(2,172) |
|
11,649 |
(28,079) |
Profit/(loss) before
net finance expense and taxation |
61,963 |
(131,935) |
|
251,592 |
(112,927) |
Finance income |
365 |
258 |
|
1,512 |
1,384 |
Finance expense |
(2,644) |
(2,888) |
|
(11,047) |
(12,617) |
Profit/(loss) before
taxation |
59,684 |
(134,565) |
|
242,057 |
(124,160) |
Tax
credit/(expense) |
(11,399) |
(64,295) |
|
(147,113) |
(72,988) |
Net profit/(loss) for
the year |
48,285 |
(198,860) |
|
94,944 |
(197,148) |
1 These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to “Non IFRS measures”
on page 26 for definitions.
2 Reflect the London PM fix price.
For further information, please visit our website:
www.acaciamining.com or contact:
Acacia Mining plc |
+44 (0) 207 129 7150 |
Brad Gordon, Chief Executive
Officer
Andrew Wray, Chief Financial
Officer
Giles Blackham, Investor
Relations Manager
Bell Pottinger |
+44 (0) 203 772 2500 |
Lorna Cobbett
About Acacia Mining plc
Acacia Mining plc (LSE:ACA) is Tanzania’s largest gold miner and
one of the largest producers of gold in Africa. We have three producing mines, all
located in north-west Tanzania:
Bulyanhulu, Buzwagi, and North Mara and a portfolio of exploration
projects in Tanzania, Kenya, Burkina
Faso and Mali.
Our approach is focused on strengthening our core pillars; our
business, our people and our relationships, whilst continuing to
invest in our future. Our ambition is to create a leading African
Company.
Acacia is a UK public company headquartered in London. We are listed on the Main Market of
the London Stock Exchange with a secondary listing on the Dar es
Salaam Stock Exchange. Barrick Gold Corporation is our majority
shareholder. Acacia reports in US dollars and in accordance with
IFRS as adopted by the European Union, unless otherwise stated in
this report.
Conference call
A presentation will be held for analysts and investors on
14 February 2017 at Noon London
time.
For those unable to attend, an audio webcast of the presentation
will be available on our website www.acaciamining.com. For those
who wish to ask questions, the access details for the conference
call are as follows:
Participant dial in: |
+44 (0) 20 3003 2666 |
Password: |
Acacia |
|
|
FORWARD- LOOKING STATEMENTS
This report includes “forward-looking
statements” that express or imply expectations of future events or
results. Forward-looking statements are statements that are not
historical facts. These statements include, without limitation,
financial projections and estimates and their underlying
assumptions, statements regarding plans, objectives and
expectations with respect to future production, operations, costs,
projects, and statements regarding future performance.
Forward-looking statements are generally identified by the words
“plans,” “expects,” “anticipates,” “believes,” “intends,”
“estimates” and other similar expressions.
All forward-looking statements involve a number of risks,
uncertainties and other factors, many of which are beyond the
control of Acacia, which could cause actual results and
developments to differ materially from those expressed in, or
implied by, the forward-looking statements contained in this
report. Factors that could cause or contribute to differences
between the actual results, performance and achievements of
Acacia include, but are not limited to, changes or developments
in political, economic or business conditions or national or local
legislation or regulation in countries in which Acacia
conducts - or may in the future conduct - business, industry
trends, competition, fluctuations in the spot and forward price of
gold or certain other commodity prices (such as copper and diesel),
currency fluctuations (including the US dollar, South African rand,
Kenyan shilling and Tanzanian shilling exchange rates),
Acacia’s ability to successfully integrate acquisitions,
Acacia’s ability to recover its reserves or develop new
reserves, including its ability to convert its resources into
reserves and its mineral potential into resources or reserves, and
to process its mineral reserves successfully and in a timely
manner, Acacia‘s ability to complete land acquisitions
required to support its mining activities, operational or technical
difficulties which may occur in the context of mining activities,
delays and technical challenges associated with the completion of
projects, risk of trespass, theft and vandalism, changes in
Acacia‘s business strategy including, the ongoing implementation
of operational reviews, as well as risks and hazards associated
with the business of mineral exploration, development, mining and
production and risks and factors affecting the gold mining industry
in general. Although Acacia‘s management believes that the
expectations reflected in such forward-looking statements are
reasonable, Acacia cannot give assurances that such
statements will prove to be correct. Accordingly, investors should
not place reliance on forward-looking statements contained in this
report.
Any forward-looking statements in this report only reflect
information available at the time of preparation. Save as required
under the Market Abuse Regulation or otherwise under applicable
law, Acacia explicitly disclaims any obligation or
undertaking publicly to update or revise any forward-looking
statements in this report, whether as a result of new information,
future events or otherwise. Nothing in this report should be
construed as a profit forecast or estimate and no statement made
should be interpreted to mean that Acacia‘s profits or
earnings per share for any future period will necessarily match or
exceed the historical published profits or earnings per share of
Acacia.
LSE: ACA
TABLE OF CONTENTS
|
|
Interim Operating
Review |
9 |
Exploration Review |
14 |
Financial Review |
19 |
Significant judgements in applying
accounting policies and key sources of estimation uncertainty |
25 |
|
|
Non-IFRS measures |
26 |
Risk Review |
30 |
Condensed Financial
Information: |
|
|
|
- Consolidated Income
Statement and Consolidated Statement of Comprehensive Income |
31/32 |
- Consolidated Balance
Sheet |
33 |
- Consolidated
Statement of Changes in Equity |
34 |
- Consolidated
Statement of Cash Flows |
35 |
- Notes to the
Condensed Financial Information |
36 |
|
|
|
|
Operating Review
Acacia delivered production of 829,705, an increase of 13% year
on year, while AISC of US$958 per
ounce sold and cash cost of US$640
per ounce sold were 14% and 17% respectively lower than 2015.
North Mara’s production for the full year of 378,443
ounces was 32% higher than in 2015, and a record for the mine. This
was as a result of a 25% higher head grade driven by the higher
mining grade achieved from the Gokona underground mine (15.6 g/t)
and a 4% improvement in recoveries. Gold ounces sold for the full
year of 376,255 ounces were 30% higher than the prior year and
broadly in line with production. AISC fell by 20% to US$733 per ounce sold predominantly due to the
higher production base and lower cash costs.
Bulyanhulu saw a 6% increase in production to 289,432
ounces, the highest production level achieved since 2006, after it
overcame significant plant downtime in Q3 2016. Ounces produced
from underground mining increased by 6% from 2015, as a result of
an 8% increase in grade in combination with a 3% increase in
throughput due to improved plant availability and underground
delivery. Ounces produced from tailings retreatment increased by 4%
due to 21% higher throughput and 8% higher head grade, partly
offset by 19% lower recovery rates. AISC decreased by 16% to
US$1,058 per ounce sold due to the
higher production base, lower direct mining costs and lower
sustaining capital expenditure.
At Buzwagi, gold production of 161,830 ounces was 5%
lower than 2015 due to a 14% decrease in grade as a result of ore
being primarily sourced from lower grade splay material. This was
partly offset by an 8% increase in throughput due to improved mill
availability and improved milling rates. AISC decreased by 8% to
US$1,095 per ounce sold from
US$1,187 per ounce sold in 2015,
mainly due to lower cash costs.
Total tonnes mined during the year amounted to 38.5 million
tonnes, 7% lower than 2015 primarily due to lower waste tonnes
mined at Buzwagi. Ore tonnes mined of 9.4 million tonnes were 9%
lower than 2015 mainly due to lower ore tonnes from the Nyabirama
open pit at North Mara as mining focused on waste stripping of the
next stage of the pit.
Ore tonnes processed amounted to 9.8 million tonnes, an increase
of 6% on 2015, primarily driven by increased throughput at
Bulyanhulu as reprocessed tailings increased from 1.4 million
tonnes in 2015 to 1.7 million tonnes in 2016.
Head grade for the year (excluding tailings retreatment) of
3.3g/t was 6.5% higher than in 2015 (3.1g/t). This was due to a 25%
increase in head grade at North Mara due to the contribution of the
higher grade Gokona underground ore and an 8% higher head grade at
Bulyanhulu due to an increase in mine grade, which was partially
offset by a 14% decrease in head grade at Buzwagi due to the mining
of lower grade splay areas.
Our cash costs for the year were 17% lower than in 2015, and
amounted to US$640 per ounce sold.
The decrease was primarily due to:
? Higher production base
(US$76/oz);
? Higher capitalisation of
development costs mainly at North Mara due to higher waste
stripping at Nyabirama Stage 4 (US$39/oz);
? Lower labour costs due to a
reduction in employees, together with a favourable currency impact
on Tanzanian shilling based wages when compared to 2015
(US$23/oz); and
? Lower energy and fuel costs due
to lower fuel prices and an increased reliance on grid power
(US$13/oz).
These were partly offset by higher sales related costs as a
result of higher sales volumes (US$17/oz) and increased contracted services,
mainly related to increased contracted mining and drilling at North
Mara (US$12/oz).
All-in sustaining cost of US$958
per ounce sold for the year was 14% lower than 2015, driven by
lower cash costs (US$132/oz) (refer
to above) and an increased production base (US$40/oz), lower sustaining capital expenditure
(US$25/oz) and lower corporate
administration costs (US$15/oz). This
was partly offset by higher capitalised development mainly at North
Mara (US$36/oz) and the impact of a
higher revaluation charge relating to future share-based payments
compared to 2015 amounting to US$24.4
million (US$30/oz) following
the 108% increase in Acacia’s share price over the year.
Cash generated from operating activities of US$318.0 million doubled from 2015. EBITDA of
US$415.4 million was in part offset
by corporate tax payments of US$40.9
million and outflows associated with working capital items
of US$17.6 million, mainly relating
to indirect taxes and net finance charges of US$7.2 million
Capital expenditure amounted to US$195.9
million compared to US$183.6
million in 2015. Capital expenditure primarily comprised of
capitalised development (US$138.7
million), investment in mobile equipment and component
change-outs (US$31.3 million),
investments in tailings and infrastructure (US$16.8 million), land purchases at North Mara
(US$4.8 million) and investment in
the Bulyanhulu winder upgrade (US$2.0
million).
Mine Site Review
Bulyanhulu
Key statistics
|
|
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
|
2016 |
2015 |
|
2016 |
2015 |
Key operational
information: |
|
|
|
|
|
|
Ounces produced |
oz |
79,859 |
78,223 |
|
289,432 |
273,552 |
Ounces sold |
oz |
74,803 |
79,233 |
|
279,286 |
265,341 |
Cash cost per ounce
sold1 |
US$/oz |
784 |
653 |
|
722 |
797 |
AISC per ounce
sold1 |
US$/oz |
1,061 |
999 |
|
1,058 |
1,253 |
Copper production |
Klbs |
1,707 |
1,774 |
|
6,391 |
6,308 |
Copper sold |
Klbs |
1,309 |
1,559 |
|
5,570 |
5,424 |
Run-of-mine: |
|
|
|
|
|
|
Underground ore tonnes
hoisted |
Kt |
244 |
292 |
|
909 |
993 |
Ore milled |
Kt |
263 |
268 |
|
933 |
983 |
Head grade |
g/t |
9.1 |
8.7 |
|
9.3 |
8.6 |
Mill recovery |
% |
91.8% |
88.8% |
|
91.4% |
88.5% |
Ounces produced |
oz |
70,808 |
66,874 |
|
254,552 |
240,044 |
Cash cost per tonne
milled1 |
US$/t |
209 |
176 |
|
197 |
195 |
Reprocessed
tailings: |
|
|
|
|
|
|
Ore milled |
Kt |
451 |
380 |
|
1,650 |
1,368 |
Head grade |
g/t |
1.3 |
1.6 |
|
1.4 |
1.3 |
Mill recovery |
% |
47.2% |
56.6% |
|
45.8% |
56.6% |
Ounces produced |
oz |
9,051 |
11,349 |
|
34,880 |
33,508 |
Capital
Expenditure |
|
|
|
|
|
|
- Sustaining
capital |
US$('000) |
3,833 |
10,185 |
|
20,231 |
42,419 |
- Capitalised
development |
US$('000) |
15,996 |
11,563 |
|
63,082 |
59,830 |
- Expansionary
capital |
US$('000) |
188 |
234 |
|
1,262 |
(957) |
|
|
20,017 |
21,982 |
|
84,575 |
101,292 |
- Non-cash
reclamation asset adjustments |
US$('000) |
3,853 |
(3,875) |
|
10,728 |
(5,663) |
Total capital
expenditure |
US$('000) |
23,870 |
18,107 |
|
95,303 |
95,629 |
1These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to ‘Non-IFRS measures”
on page 26 for definitions.
Operating performance
Gold production of 289,432 ounces was 6% above 2015, mainly
driven by an 8% increase in run-of-mine head grade as underground
mining grades improved, and a 3% increase in recovery, partly
offset by 5% lower throughput due to the plant shutdown in Q3 2016.
This was in combination with a 4% increase in production from
reprocessed tailings as a result of increased throughput combined
with an 8% increase in grade recovered.
Gold sold for the year of 279,286 ounces, was 5% lower than
production as a result of logistical delays related to concentrate
shipments experienced in December
2016.
Copper production of 6.4 million pounds for the current year
period was in line with 2015, as lower throughput was offset by
improved copper grades
Cash costs of US$722 per ounce
sold were 9% lower than 2015 (US$797), mainly due to the higher production
base (US$64/oz), lower labour costs
mainly driven by a reduction in headcount (US$40/oz), partly offset by higher sales related
costs due to higher volumes (US$12/oz) and increased costs associated with
self-generation of power given concerns around the impact of grid
instability on process plant performance.
AISC per ounce sold for the year of US$1,058 was 16% lower than 2015 (US$1,253) driven by the impact of lower
sustaining capital ($79/oz), lower
cash costs ($75/oz); lower corporate
administration expenditure ($28/oz)
and the impact of the higher production base ($23/oz). This was partially offset by higher
capitalised development costs ($12/oz).
Capital expenditure for the year before reclamation adjustments
amounted to US$84.6 million, 17%
lower than 2015 (US$101.3 million),
mainly driven by lower sustaining capital expenditure partly offset
by higher capitalised development. Capital expenditure mainly
consisted of capitalised underground development costs
(US$63.1 million), investment in
mobile equipment and component change-outs (US$10.6 million), investment in tailings and
infrastructure (US$8.3 million) and
investments in the winder upgrade (US$2.0
million).
In 2017 we expect to see an increase of US$20 million in the level of sustaining capital
incurred at the mine, predominantly driven by investment into
enhancing the operation of the process plant and a targeted fleet
renewal programme to improve operating efficiencies amongst the
older equipment within the underground fleet. We also continue to
invest in underground development and in support of this will be
upgrading ventilation and paste line infrastructure as we focus on
creating greater flexibility underground. This investment in
core infrastructure is a critical element in optimising the value
delivery from this long-life, high grade asset in combination with
continuing to drive cost savings and improve mining
efficiencies.
Buzwagi
Key statistics
|
|
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
|
2016 |
2015 |
|
2016 |
2015 |
Key operational
information: |
|
|
|
|
|
|
Ounces produced |
oz |
41,912 |
45,196 |
|
161,830 |
171,172 |
Ounces sold |
oz |
41,514 |
41,879 |
|
161,202 |
166,957 |
Cash cost per ounce
sold1 |
US$/oz |
1,035 |
1,101 |
|
1,031 |
1,046 |
AISC per ounce
sold1 |
US$/oz |
1,056 |
1,236 |
|
1,095 |
1,187 |
Copper production |
Klbs |
2,547 |
2,721 |
|
9,847 |
8,672 |
Copper sold |
Klbs |
2,075 |
2,160 |
|
9,175 |
7,894 |
Mining
information: |
|
|
|
|
|
|
Tonnes mined |
Kt |
5,090 |
5,573 |
|
21,585 |
24,989 |
Ore tonnes mined |
Kt |
1,509 |
1,432 |
|
5,317 |
5,658 |
Processing
information: |
|
|
|
|
|
|
Ore milled |
Kt |
1,159 |
1,060 |
|
4,404 |
4,085 |
Head grade |
g/t |
1.2 |
1.4 |
|
1.2 |
1.4 |
Mill recovery |
% |
94.5% |
94.8% |
|
94.5% |
94.1% |
Cash cost per tonne
milled1 |
US$/t |
37 |
44 |
|
38 |
43 |
Capital
Expenditure |
|
|
|
|
|
|
- Sustaining
capital |
US$('000) |
264 |
2,741 |
|
3,582 |
10,855 |
- Capitalised
development |
US$('000) |
- |
- |
|
- |
1,480 |
|
|
264 |
2,741 |
|
3,582 |
12,335 |
- Non-cash
reclamation asset adjustments |
US$('000) |
3,312 |
(8,857) |
|
4,524 |
(7,364) |
Total capital
expenditure |
US$('000) |
3,576 |
(6,116) |
|
8,106 |
4,971 |
1These are non-IFRS
financial performance measures with no standard meaning under IFRS.
Refer to “Non-IFRS measures” on page 26 for definitions.
Operating performance
Gold production for the full year of 161,830 ounces was 5% lower
than in 2015 due to a 14% decrease in grade as a result of the
focus on waste movement in the first half of the year and the
mining of ore from lower grade splay areas. This was partly offset
by an 8% increase in throughput due to improved mill availability
and improved milling rates.
Total tonnes mined of 21.6 million tonnes were 14% lower than
2015, primarily due to lower waste tonnes mined at Buzwagi as a
result of the movement of rill material impacting on equipment
productivity, in combination with general lower equipment
availability.
Copper production of 9.8 million pounds for the year was 14%
higher than the prior year period due to increased throughput and
copper recovery rates, partly offset by lower copper grades.
Cash costs for the year of US$1,031 per ounce sold were marginally lower
than 2015, primarily driven by lower fuel costs due to lower global
fuel prices and lower consumption ($51/oz), lower general and administration costs
as a result of the optimisation of warehousing and logistics
processes ($49/oz), lower consumables
costs primarily as a result of process plant improvements
($39/oz) and lower labour costs as a
result of a reduction in headcount ($26/oz). This was partially offset by the impact
of the lower production base ($37/oz).
AISC per ounce sold of US$1,095
was 8% lower than the prior year. This was mainly driven by lower
capital expenditure (US$54/oz), lower
corporate administration expenditure ($26/oz) and lower cash costs ($15/oz).
Capital expenditure before reclamation adjustments of
US$3.6 million was 71% lower than
2015 (US$12.3 million). Key capital
expenditure for the year consists of investments in the tailings
storage facility and infrastructure of US$2.8 million and mobile equipment and component
change out costs of US$0.2
million.
In the first half of the year we entered into zero cost collars
in relation to the majority of our gold production from Buzwagi in
2016 and Q1 2017. In 2016, the agreements covered 81,000 ounces of
production and provided a guaranteed floor price of US$1,150 per ounce and exposure to the gold price
up to an average of US$1,290 per
ounce. In Q1 2017, the agreements cover 43,000 ounces, with an
average floor price of US$1,150 per
ounce and a cap of US$1,421 per
ounce.
During 2016 we assessed the potential to extend the mining of
the open pit at Buzwagi and as a result now expect to continue
mining until the end of 2017, followed by at least two years of
processing stockpiles. The design changes have led to the deepening
of the final pit by 35 metres, which adds 2 million tonnes of ore
into the life of mine, amounting to 152,000 ounces of additional
production at negligible additional capital cost. The changes to
the design of the pit include a narrower ramp with increased
gradient in the final benches. The additional ore tonnes have a
strip ratio of approximately 2:1 and we therefore expect total
tonnes moved in the second half of the year to be substantially
lower than H1. The additional mine life will lead to an increase of
35% in production from Buzwagi in 2017, with a 25% reduction in
AISC which will drive significant free cash flow.
North Mara
Key statistics
|
|
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
|
2016 |
2015 |
|
2016 |
2015 |
Key operational
information: |
|
|
|
|
|
|
Ounces produced |
oz |
91,183 |
77,304 |
|
378,443 |
287,188 |
Ounces sold |
oz |
92,975 |
77,505 |
|
376,255 |
288,905 |
Cash cost per ounce
sold1 |
US$/oz |
436 |
604 |
|
410 |
590 |
AISC per ounce
sold1 |
US$/oz |
850 |
932 |
|
733 |
915 |
Open pit: |
|
|
|
|
|
|
Tonnes mined |
Kt |
4,182 |
4,133 |
|
15,556 |
15,110 |
Ore tonnes mined |
Kt |
702 |
967 |
|
2,752 |
3,361 |
Mine grade |
g/t |
2.1 |
1.9 |
|
1.9 |
2.4 |
Underground: |
|
|
|
|
|
|
Ore tonnes
trammed |
Kt |
127 |
130 |
|
440 |
298 |
Mine grade |
g/t |
11.0 |
8.7 |
|
15.6 |
7.1 |
Processing
information: |
|
|
|
|
|
|
Ore milled |
Kt |
693 |
705 |
|
2,830 |
2,833 |
Head grade |
g/t |
4.4 |
3.8 |
|
4.5 |
3.6 |
Mill recovery |
% |
92.1% |
89.5% |
|
92.0% |
88.2% |
Cash cost per tonne
milled1 |
US$/t |
59 |
66 |
|
55 |
60 |
Capital
Expenditure |
|
|
|
|
|
|
- Sustaining
capital2 |
US$('000) |
13,739 |
5,951 |
|
28,317 |
19,678 |
- Capitalised
development |
US$('000) |
21,929 |
11,805 |
|
75,609 |
48,376 |
- Expansionary
capital |
US$('000) |
1,475 |
- |
|
2,399 |
962 |
|
|
37,143 |
17,756 |
|
106,325 |
69,016 |
- Non-cash
reclamation asset adjustments |
US$('000) |
3,319 |
(21,179) |
|
6,703 |
(18,909) |
Total capital
expenditure |
US$('000) |
40,462 |
(3,423) |
|
113,028 |
50,107 |
1These are non-IFRS financial performance measures
with no standard meaning under IFRS. Refer to ‘Non-IFRS measures”
on page 26 for definitions.
2 Includes land purchases recognised as long term
prepayments
Operating performance
Gold production for the full year of 378,443 ounces was 32%
higher than in 2015, and a record for the mine. This was a result
of 25% higher head grade driven by the higher contribution from the
Gokona underground mine and a resultant 4% improvement in
recoveries. Gold ounces sold for the full year of 376,255 ounces
were 30% higher than the prior year and broadly in line with
production
The impact of the higher grade underground ounces combined with
an increase in the open pit mine grade at Nyabirama resulted in a
head grade of 4.5g/t, 25% up from 2015. Gold ounces sold for the
year of 376,255 ounces were in line with production, but 30% higher
than the prior year due to the higher production base.
Cash costs of US$410 per ounce
sold were 31% lower than 2015 (US$590), mainly driven by the higher production
base (US$121/oz) and higher
capitalisation of development costs at North Mara due to higher
waste stripping at Nyabirama Stage 4 (US$87/oz), partly offset by increased sales
related costs as a result of higher sales volumes (US$19/oz), higher contracted services
(US$14/oz) and higher maintenance
costs ($8/oz).
AISC of US$733 per ounce sold was
20% lower than 2015 (US$915)
primarily due to lower cash costs (US$180/oz) , the impact of increased sales
volumes (US$75/oz) and lower
corporate administration expenditure (US$16/oz), partly offset by higher capitalised
development costs (US$72/oz) and
higher sustaining capital expenditure (US$23/oz).
Capital expenditure for the year before reclamation adjustments
of US$106.3 million was 54% higher
than in 2015 (US$69.0 million). Key
capital expenditure include capitalised stripping costs
(US$57.1 million), investment in
mobile equipment and component change-outs (US$20.5 million), capitalised underground
development costs (US$18.5 million),
and investment in tailings and infrastructure (US$5.8 million). In addition, US$4.8 million was spent on land acquisitions
primarily around the Nyabirama open pit. Land acquisition costs are
included in capital expenditure above as they are included in AISC
but are treated as long term prepayments in the balance sheet.
Exploration Review
Overall, 2016 was a very successful year for exploration with
the key highlights including our discovery of multiple high-grade
mineralised shoots on the Liranda Corridor in Kenya and the delineation of more than 40
multi-kilometre scale gold anomalies in the Houndé Belt in
Burkina Faso and on the
Senegal-Mali Shear Zone in Mali.
Additionally, on our brownfield projects around our mines in
Tanzania, we had another
successful year identifying potential underground grade gold
mineralisation below the planned final Nyabirama open pit at North
Mara from surface drilling.
Greenfields Projects
West Kenya Joint Venture Projects
An extensive exploration programme was completed in 2016 which
including the drilling of 70 diamond core (“DD”) holes (40,600
meters) and 44 reverse circulation holes (“RC”) (4,438 metres). All
of the drilling occurred on the Liranda Corridor Project within the
Kakamega Dome Camp focussing on the Acacia and Bushiangala
Prospects.
Kakamega Dome
Camp
Diamond core drilling within the Liranda Corridor identified the
Bushiangala and Acacia prospects as having the highest short-term
potential to host significant gold mineralisation within the 12km
“Liranda Corridor” based on high grade results returned from
first-pass drilling undertaken in late 2014 within the Kakamega
region. The originally budgeted drill programme for 2016 was 50
reverse circulation (RC) and diamond core (DD) holes for
approximately 35,000-40,000 metres. Drilling commenced in January
but initial drill results were disappointing with best intercepts
of 1m @ 3.46 g/t Au and 1.4m @ 1.47 g/t Au from the initial holes.
Subsequent structural work suggested that the controls of the high
grade may be oblique to the main east-west fabric and may also dip
parallel to the direction of drilling.
As a result of our new understandings the drill programme was
modified in mid-2015 and closer spaced drilling was undertaken
around the original mineralised intersections in LCD0057 (Acacia)
and LCD0053 (Bushiangala) in order to confirm the new
interpretation of the orientation of mineralisation. This strategy
paid off with closer spaced drilling at Acacia confirming
steeply dipping east-northeast striking mineralised shears zones
with quartz veinlets, sulphides (pyrite + arsenopyrite +/-
pyrrhotite +/- sphalerite +/- chalcopyrite, molybdenite) and
alteration (carbonate +/- sericite +/- vanadium mica +/-silica).
Significant intersections from this drilling included 2.5m @ 25g/t,
4m @ 55g/t, 12.8m @ 15.3g/t and 4.3m @ 6.48g/t and also indicated
the potential for multiple mineralised structures on both the
Acacia and Bushiangala shoots.
Subsequent to our new interpretation of the controls on gold
mineralisation, and confirmation from drilling, we commenced an
extensive drilling programme targeting mineralisation from 100
metres to 700 metres vertical depth on the Acacia shoot and from
100 metres to 400 metres on the Bushiangala shoot. A total of
70 diamond holes for 40,600 metres were drilled in 2016 targeting
extensions of mineralisation on the Bushiangala and Acacia shoots
bringing the drilling on Liranda Corridor targets since 2014 to 44
RC Holes for 4,438 metres and 132 DD holes for 64,700 metres.
Better results received during H2 2016 from the Acacia and
Bushiangala shoots included 6.8m @ 10.4g/t, 3.5m @ 12.3g/t, 2.2m @
126g/t, 3m @ 11.2g/t, 5.9m @ 8.01g/t, 7m @ 17.6g/t, 4m @ 9.99g/t
and 1.1m @ 35.8g/t.
The diamond core results from the deeper drilling at Acacia are
very encouraging and show the potential for significant down
dip/plunge extensions to mineralised zones. There are potential
extensions at the Bushiangala prospect which remains open both
laterally and vertically.
In Q1 2017, we plan to be able to declare an initial Inferred
Resource on the Liranda Corridor of up to 1 million ounces at a
grade of around 10 grams per tonne. We are also continuing to drill
step-out holes in order to fully understand the size of the
existing mineralised zones (lateral and depth extensions) and
targeting the expansion of the resource to in excess of 2 million
ounces by early 2018. The drilling will also seek to identify
further high-grade structures, improve our understanding of
high-grade controls and to infill gaps between holes in order to
increase the confidence of the resource as we move through the
year. We also plan to test further potential shoots within the
Liranda Corridor along strike to the east.
In Q3 2016, Acacia acquired the remaining 49% of the main two
tenements from AfriOre (Lonmin) that form the majority of the
West Kenya project for a
consideration of US$5 million.
Lake Zone Camp
No drilling was undertaken however a review of all targets
within the Camp was completed with a focus on identifying the next
series of high priority targets for drill testing. Desktop reviews
of existing geological, geochemical and geophysical data sets were
completed and targets ranked. As a result, three multi-kilometre
target corridors have been selected drilling in 2017.
Burkina Faso Projects
South Houndé Joint Venture – 50%
In November 2014, Acacia entered
into an earn-in agreement with Sarama Resources Ltd (“Sarama”)
whereby Acacia can earn an interest of up to 70% with the
expenditure of US$14 million within
four years, on the South Houndé Project (“Project”) in Burkina Faso. Acacia may increase its interest
in the Project to 75% on satisfaction of certain conditions
relating to resource delineation. During 2016, we continued
to explore the Project taking our total spend since the inception
of the JV to in excess of US$7
million and thereby earned a 50% stake in the Project.
We are now progressing to Phase 2 of the Agreement and have elected
to exercise our right to act as Manager of the Project from the
start of 2017.
In February 2016, Sarama declared
an increase to the Inferred Resource on the Tankoro deposit of
600koz, taking the new Inferred Resource to 2.1Moz at 1.5g/t Au.
This was largely based on results from the entire 2015 and early
2016 drill programmes.
During the year, we completed exploration both within the
existing Tankoro resource area and also on regional targets. A
total of 17,229 metres of aircore, 8,262 metres of RC and 6,838
metres of diamond core drilling were completed during the year
across a number of targets. In addition to this, we carried
out regional auger geochemical drilling, infill soil geochemical
sampling, and pole-dipole gradient array induced polarisation
geophysical surveys to better define regional targets and gold
anomalies. Results from drilling completed during 2016 continue to
encourage with better results from the Tankoro resource area and
prospects along the 15km trend including 8m @ 3.31g/t, 8m @
3.97g/t, 5m @ 5.25g/t, 9m @ 3.39g/t,16m @ 3.04g/t, 14m @ 4.12g/t,
15m @ 7.44g/t, 14m @ 2.13g/t, 13.7m @ 5.67g/t,17.4m @ 5.88g/t, 2m @
9.53g/t, 12m @ 5.78g/t and 10m @ 7.15g/t.
A detailed structural study was undertaken by the JV during the
year to assess the controls on higher grade mineralisation within
the resource, and resulted in the identification of interpreted
oblique cross structures associated with discrete zones containing
grades in excess of 5g/t. Diamond core drilling to test one
of these oblique structures returned high grade results from DDH086
(17m @ 5.67g/t Au from 428m), although lower grade intersections
were returned from two further holes drilled at the end of
2016. Drilling is ongoing in order to evaluate at least four
interpreted high grade gold shoots on the MM and MC Zones at
Tankoro in order to initially scope out the upside potential of
these higher grade shoots.
In 2017, the exploration budget for the South Houndé Project is
US$4 million, comprising a programme
of 12,000 metres of diamond core drilling, 10,000 metres of reverse
circulation drilling, and 28,000 metres of aircore drilling.
Additionally mapping, pole-dipole gradient array induced
polarisation geophysical surveys and trenching will look to upgrade
regional targets into drill targets. The aim of the Tankoro
drilling programme is to add additional high grade resources on MM
and MC Trend resource areas in order to identify underground
economic ounces to significantly impact the Tankoro Resource,
whilst the regional drilling programmes are designed to discover a
new large-scale gold deposit, or at a minimum several satellite ore
bodies, capable of positively impacting the quality, size and
economics of the global resources on the Project.
Pinarello and
Konkolikan Projects
In March 2015 Acacia increased its
exploration footprint in the Houndé Belt doing a deal with Canyon
Resources on six exploration licences which are contiguous with
other Acacia joint venture properties and comprise the Pinarello
and Konkolikan Projects. Acacia recently earned a 75% interest in
both projects through exploration expenditure of US$1.5 million over the past two years and is
advancing these projects to drill ready status.
During 2016, we continued to undertake infill soil geochemical
sampling programmes designed to better delineate regional
gold-in-soil anomalies defined by wide spaced (1km) sampling
programmes. We also acquired and completed interpretation of ASTER
data and a high-resolution radiometric - magnetic survey. This data
is currently being interpreted and integrated with mapping and soil
geochemistry to assist with target generation, ranking and
prioritisation.
Three targets, namely Tankoro Corridor South West Extension,
Dopala and Dafala prospects, were tested with wide-spaced
reconnaissance aircore drill traverses (24,844 metres) during the
year. Drill results from the few traverses drilled at Dopala and
Dafala were largely disappointing and initial indications are that
gold-in-soil anomalism is at least partly associated with a
plethora of thin quartz veins within meta-sediments. Drilling
results from the Tankoro Corridor Southern Extension prospect were
much more encouraging and will require follow-up, with highlight
results including 2m @ 1.58g/t, 8m @ 0.51g/t, 8m @ 0.59g/t, 4m @
1.19g/t, 1m @ 4.85g/t, 9m @ 0.85g/t, 12m @ 0.80g/t, 19m @ 0.52g/t,
25m @ 0.44g/t, 13m @ 0.89g/t, 8m @ 1.66g/t.
Work programmes during 2017 will consist of further regional
aircore drilling across already delineated litho-structural
corridors associated with gold-in-soil / multi-element geochemical
anomalies and several geophysical targets. The 2017 budget includes
in excess of 40,000 metres of AC and 5,000 metres of RC
drilling.
Central Houndé JV
Project
The Central Houndé JV Project is a joint venture with Thor
Explorations Ltd, and is a grassroots exploration project covering
three exploration licences over an area of 474 square
kilometres. Acacia has earned 51% in the property and can
earn up to 80% in the Project through exploration spend of
US$2 million in the next two years
and the delivery of a pre-feasibility study.
The Central Houndé and the Konkolikan properties are contiguous
with each other and cover part of a large north-south trending
shear zone, the Ouango-Fitiri Shear Zone (OFSZ), that extends from
Ivory Coast in the south to the
Houndé township in the north, more than 200km. Extensive
surface gold anomalies up to 5g/t have been identified across the
projects from soil sampling, including the 10km long,
northeast-trending, Legue-Bongui “corridor” in the southeast of the
Central Houndé JV project.
During the year we completed infill soil sampling and followed
this up with a gradient array induced polarization survey and
completed 7,506 metres of RC and 3,156 metres of diamond core. Soil
geochemical sampling surveys defined a very large gold anomaly
(Legue-Bongui Corridor) extending over 10km north-south and 3km
east-west, with assay results up to 5,000ppb Au. Initial RC
and diamond core drilling has only focused on a small portion of
the central Legue-Bongui Corridor with encouraging results
including 5m @ 3.94g/t, 2m @ 84.8g/t, 6m @ 3.74g/t, 12m @
1.40g/t,19m @ 1.02g/t, 11m @ 1.49g/t, , 7m @ 1.87g/t, 2m @ 28.2g/t,
t, 5m @ 1.51g/t, 18m @ 0.60g/t, 25m @ 1.03g/t, and 11m @ 0.40g/t.
These results can be considered very encouraging as we are seeing
both broad lower grade gold mineralised zones associated with
extensive zones of alteration as well as vein-controlled high-grade
zones up to 84g/t. Gold anomalism has now been intersected in each
fence of RC drilling (multiple holes per fence – 200 metres apart)
striking in a north-north-west direction over a distance of
1.4km.
Work programmes during 2017 will continue testing the plethora
of existing surface geochemical targets, and the extensions of
already identified mineralisation, and will include at least 10,000
metres of RC and diamond core drilling.
Frontier JV
Project
In June 2016, Acacia entered into
an agreement with a local Burkinabe company, Metalor SA, the
“Frontier Joint Venture”, which includes two licences immediately
south of, and contiguous to, the Pinarello JV Project where soil
sampling has identified multiple kilometre scale gold-in-soil
anomalies. This JV added a further 500 square kilometres to
Acacia’s land package on the Houndé Belt, increasing the overall
project area to approximately ~2,700 square kilometres. The JV
allows Acacia to earn 100% of the project through certain staged
option payments totalling US$300,000
over 30 months. Metalor will hold a 1% NSR on production from the
project should Acacia identify and exploit an economic gold
deposit, and Acacia has the right to acquire the NSR from Metalor
for US$1 million at any future point
in time.
Historic reconnaissance soil sampling has already identified
gold anomalism on the Frontier JV properties associated with
interpreted regional shear zones along the contacts between granite
intrusions and volcano-sedimentary lithologies. During 2016 we have
completed acquisition and interpretation of ASTER and
high-resolution airborne radiometric and magnetic data. We have
also commenced geological and regolith mapping and have embarked on
a reconnaissance surface geochemical sampling program. A total of
1,765 surface samples were collected during the period post wet
season to end of year.
Work during 2017 will consist of mapping, regional and infill
geochemical sampling surveys, auger drilling, pitting and
trenching, as well as approximately 10,000 metres of aircore
drilling.
Mali
Tintinba
Project
In June 2015, Acacia began
exploring in Mali when it acquired
interests in the Tintinba project by entering into an earn-in
agreement with a local partner. The project comprises three
exploration licences covering over 150 square kilometres within the
Keneiba-Kedougou Window and along the world class Senegal-Mali
Shear Zone.
Initial soil sampling programmes defined eight large
multi-kilometre scale gold anomalies across the three permits.
These gold anomalies are interpreted to be associated with
second-order, northwest and northeast oriented, splay structures
within the highly prospective Senegal-Mali Shear Zone (a several
kilometre wide structural domain).
We have completed infill soil sampling and mapping prospective
geology, structure, alteration and veining, and a number of the
targets have associated artisanal workings. During the year we have
completed a total of 6,994 meters of RC drilling. Drilling
comprised wide spaced fences on four of the anomalies – namely
Tribala, Zadi, Bounbou and Baga. Results as expected for this type
of broad reconnaissance work are mixed, however we are encouraged
by results from in particular the Tribala and Zadi prospects. A
gradient array induced polarisation survey commenced late 2016 and
is expected to be complete by early February
2017. Better results from the initial RC drilling include
19m @ 0.55g/t, 17m @ 0.71g/t, 13m @ 0.50g/t, 25m @ 0.45g/t, 7m @
1.01g/t, 23m @ 0.30g/t, 10m @ 0.35g/t, 28m @ 0.31g/t , and 13m @
1.11g/t.
Work during 2017 will comprise additional gradient array induced
polarization surveys, mapping and at least 10,000 metres of RC
drilling to test existing and new targets.
Tanzania
Nyanzaga
Project
In September 2015, Acacia entered
into an earn-in joint venture with OreCorp Limited (ASX: ORR) to
progress the Nyanzaga Project, whereby OreCorp took over management
of the project for a three year period. This structure allows the
project to be progressed whilst giving Acacia the optionality to
maintain a 75% stake in the project once it gets to a development
decision. OreCorp have continued to progress the project and during
the quarter released the positive results of a scoping study which
outlined a combined open pit and underground project that produces
2.4 million ounces of gold over a 13 year life at an AISC of
US$798/oz and requires pre-production
capital of US$248 million (inclusive
of contingency). The full study can be found on OreCorp’s website,
www.orecorp.com.au. Due to the positive results in the scoping
study, OreCorp are undertaking a pre-feasibility study into the
project which is expected to be complete in H1 2017.
Brownfield Projects
In 2016, brownfield exploration was focused on the Nyabirama ore
body at North Mara where surface diamond core drilling targeted
extensions to the high grade mineralised system below the planned
final pit. The surface drilling demonstrated the potential for
further resource potential up to 700 metres below the final Stage 4
pit. Underground drilling also continued on the Reef 2 series at
Bulyanhulu with mixed results to date.
North Mara
Nyabirama
During late 2016 we completed a drilling programme of 14 holes
for 9,940 metres of surface diamond core drilling adjacent to the
Nyabirama pit primarily designed to test the underground potential
beneath the final Stage 4 pit. The drilling was designed to
test the interpreted down-dip and plunge extensions of high grade
quartz-vein lode structures, and the use of core drilling was
designed to help with an enhanced structural understanding of the
geological model and controls on high grade.
Seven of the first ten holes returned one or more high-grade
intersections confirming the opportunity for underground mineable
resources to at least 400m beneath the open pit. The better results
from the first 10 holes included:
-
NBD01437
2.2m @ 19.8 g/t Au from 645.8m
- NBD0141 6m @ 14.7
g/t Au from 265.5m,
6m @ 7.39 g/t Au
from 387m
7m @ 197 g/t Au
from 361m incl. 1.3m @ 870g/t Au,
- NBD0142 4m @ 19.1
g/t Au from 345m,
9m @ 15.3 g/t Au
from 370m
1m @ 150 g/t Au
from 396m,
3m @ 9.21 g/t Au
from 462m
-
NBD0143
5.5m @ 11.8 g/t Au from 223m,
2m @ 11.8 g/t Au
from 283m
-
NBD0144
15m @ 15.9 g/t Au from 347m incl. 1m @ 200 g/t from 347m
-
NBD0145
1m @ 17 g/t Au from 522m
-
NBD0146
7m @ 50.2 g/t Au from 533m incl. 1m @ 320 g/t Au from 536m
The results of the drilling are considered very encouraging and
have led to the design of a further 10 hole programme to further
extend the identified mineralisation to a depth of 700m; this
programme has already commenced and consists of approximately 8,000
metres of diamond core drilling. It will cost approximately
US$2 million to drill and should be
completed in Q1 2017.
We have also budgeted a further 25,000 metres of resource
definition drilling for 2017-2018 for approximately US$5 million, of which we expect to drill
approximately 15,000 metres in 2017. If the results of these
programmes are successful, they will be incorporated into a desktop
study designed to assess the best option of providing underground
drill access points in 2018 to further test the system with the
goal of commencing underground mining operations before the
completion of the open pit in 2021.
Gokona Underground
Exploration activity during 2016 at Gokona Underground was
limited to desktop work whilst the mine updated the current
geological model and installed drilling platforms to support the
2017 and 2018 planned programmes. These programmes have been
designed to test the lateral extensions of the ore body and to
infill the known mineralisation at depth. The programme will
comprise of approximately 75,000 metres of drilling over the next
two years, with approximately 45,000 metres to be drilled in 2017.
The aim of these programmes is to be able to increase underground
life of mine to at least 10 years.
Bulyanhulu
We undertook three drill programmes in Reef 2 at Bulyanhulu in
2016 for 37,375 metres, primarily focused on enhancing our
understanding of the existing Reef 2 system. The first two
programmes were designed to infill existing resources in the Upper
East Zone and the Central Zone on Reef 2 to test whether the
current drill spacing across the Reef 2 series is appropriate. The
Reef 2 Upper East Zone was an area removed from the mine plan late
in 2015 following poor results from infill drilling, and negative
results from an economic re-evaluation during the reserves
process. The Reef 2 Central Zone is an area that is near
existing infrastructure and had the potential to be brought into
the mine plan earlier than previously planned. The 2016 preliminary
results from Central Zone have increased confidence and early
indications are showing potential for a modest increase in resource
ounces, counter balancing the previous losses from Reef 2 Upper
East area. As a result, Reef 2 Central has now been brought
forward in the new mine plan.
As a result of the closer spaced drilling, variography has shown
that the continuity of thickness and grade is less than previously
thought for the Reef 2 series. The previous 100 metre search
radius is no longer considered appropriate and has been reduced to
50 metres for indicated resource classification. This has meant
that some ounces previously classified as Probable Reserve (based
on the underlying indicated resource) have now largely been moved
to inferred resource. We are undertaking drilling programmes during
2017, primarily in the Central Zone on Reef 2, to reduce the drill
spacing in order to upgrade the current resource there and will
continue a programme of infilling the Reef 2 series in available
areas over the coming years.
The third programme of drilling in the Western step out area
continued to intersect high grade mineralisation on Reefs 2M and 2I
however generally widths have been narrower than the Eastern part
of the system. The current resource extension drill programme
will be completed in early 2017 and results, together with future
access requirements which are currently constraining drilling, will
be incorporated into future planned resource extension
programmes.
Financial Review
Continued cost discipline in combination with an increased gold
price in 2016 is reflected in the strong cash generation, with net
cash increasing by US$112.9 million
to US$218.5 million as at
31 December 2016. At the same time,
reported earnings increased significantly, but were impacted by an
increase in tax provisions of US$69.9
million recorded in Q1 2016 relating to court rulings
regarding prior year tax assessments. This is reflected in the
Acacia Group’s financial results for the year ended 31 December 2016:
· Revenue of US$1,053.5 million was US$185.4 million higher than 2015 driven by the
13% higher sales volumes.
· Cash costs decreased to
US$640 per ounce sold from
US$772 per ounce sold in 2015, driven
by the higher production base, higher capitalisation of development
costs, lower labour costs and lower energy and fuel costs, partly
offset by higher sales related costs and increased contracted
services costs.
· AISC at US$958 per ounce sold was 14% lower than in 2015
(US$1,112 per ounce sold), mainly due
to lower cash costs and the higher production base.
· EBITDA increased by 137% to
US$415.4 million, mainly driven by
the higher sales volumes, a higher gold price and lower corporate
administration costs.
· Higher tax expense of
US$147.1 million compared to the
prior year expense of US$73.0
million, driven by an increase in current corporate tax as a
result of North Mara’s increased profitability (US$54.5 million), adjustments in respect of
provisions for uncertain tax positions relating to prior years for
North Mara and Tulawaka (US$36.7
million) and deferred tax of US$55.9
million driven by provisions for uncertain tax positions for
Bulyanhulu (US$35.0 million) and
movements in temporary differences (US$20.9
million).
· As a result of the above, we
achieved a profit of US$94.9 million,
compared to a loss of US$197.1
million in 2015.
· Adjusted net earnings of
US$161.0 million were US$167.3 million higher than 2015. Adjusted
earnings per share amounted to US39.2 cents, up from US1.7 cents in
2015.
· Operational cash flow of
US$318.0 million doubled from 2015,
primarily as a result of higher gold sales volumes and prices
driving higher revenue, partly offset by unfavourable working
capital outflows due to share based payments, an increase in
accounts receivable, and payments of US$40.9
million relating to prepaid and provisional corporate tax
relating to North Mara.
The following review provides a detailed analysis of our
consolidated results for 12 months ended 31
December 2016 and the main factors affecting financial
performance. It should be read in conjunction with the unaudited
consolidated financial information and accompanying notes on pages
31 to 56, which have been prepared in accordance with International
Financial Reporting Standards as adopted for use in the European
Union (“IFRS”).
Revenue
Revenue for 2016 of US$1,053.5
million was US$185.4 million
higher than 2015 due to a 13% increase in gold sales volumes
(95,540 ounces) combined with a 7% increase in the average net
realised gold price from US$1,154 per
ounce sold in 2015 to US$1,240 in
2016.
The net realised gold price for the year of $1,240/oz was $11/oz lower than the average market price of
$1,251/oz due to the timing of sales.
Realised losses on Buzwagi related gold hedges was US$1.8 million for the year, an impact of
US$2 per ounce sold.
Included in total revenue is co-product revenue of US$39.1 million for 2016, 10% higher than the
prior year period (US$35.7 million).
The 2016 average realised copper price of US$2.21 per pound compared unfavourably to that
of 2015 (US$2.33 per pound), and was
driven by the lower market price for copper. This was offset by an
11% increase in copper sales volumes mainly from Buzwagi.
Cost of sales
Cost of sales was US$727.1 million
for 2016, representing a decrease of 1% on the prior year period
(US$734.1 million). The key aspects
impacting the cost of sales for the year include an 8% reduction in
direct mining costs, partly offset by higher depreciation and
amortisation costs as a result of the higher production base and
higher sales related costs as a result of higher sales volumes.
The table below provides a breakdown of cost of sales:
(US$'000) |
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
2016 |
2015 |
|
2016 |
2015 |
Cost of
Sales |
|
|
|
|
|
Direct mining
costs |
132,937 |
132,385 |
|
479,022 |
520,943 |
Third party smelting
and refining fees |
6,360 |
6,716 |
|
25,588 |
21,110 |
Realised losses on
economic hedges |
1,004 |
4,340 |
|
9,619 |
12,358 |
Realised losses on
gold hedges |
487 |
- |
|
1,818 |
- |
Royalty expense |
11,808 |
10,069 |
|
47,237 |
38,058 |
Depreciation and
amortisation* |
43,718 |
43,364 |
|
163,796 |
141,697 |
Total |
196,314 |
196,874 |
|
727,080 |
734,167 |
*Depreciation and amortisation includes the depreciation
component of the cost of inventory sold of US$2.6 million (2015 US$3.5 million).
A detailed breakdown of direct mining expenses is shown in the
table below:
(US$'000) |
|
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
|
2016 |
2015 |
|
2016 |
2015 |
Direct mining
costs |
|
|
|
|
|
|
Labour |
|
24,006 |
26,200 |
|
90,013 |
108,786 |
Energy and fuel |
|
24,082 |
23,463 |
|
89,757 |
100,453 |
Consumables |
|
26,248 |
27,536 |
|
105,152 |
108,324 |
Maintenance |
|
30,807 |
23,679 |
|
111,451 |
106,963 |
Contracted
services |
|
37,226 |
32,240 |
|
133,734 |
124,088 |
General administration
costs |
|
23,540 |
24,873 |
|
86,761 |
90,290 |
Gross direct mining
costs |
|
165,909 |
157,991 |
|
616,868 |
638,904 |
Capitalised mining
costs |
|
(32,973) |
(25,606) |
|
(137,846) |
(117,961) |
Total direct mining
costs |
|
132,936 |
132,385 |
|
479,022 |
520,943 |
Gross direct mining costs of US$616.9
million for 2016 were 3% lower than 2015 (US$638.9 million). The overall reduction was
driven by the following:
· A 17% reduction in labour costs,
mainly as a result of a 28% reduction in international employees
and a 21% reduction in national employees across sites, driven by
localisation efforts and restructuring, combined with savings
associated with local labour costs given the devaluation of the
Tanzanian shilling to the dollar.
· An 11% reduction in energy and
fuel expenses across all sites due to lower global fuel prices,
lower consumption and the impact of a favourable exchange rate on
locally purchased power as well as increased reliance on the
national electricity grid resulting in lower self-generation.
· A 3% decrease in consumables
costs mainly at Buzwagi due to lower reagents and chemicals costs
as a result of lower cyanide usage, lower grinding media costs
driven by the optimised usage of grinding balls, lower explosives
costs driven by improved blasting practice and the overall impact
of lower negotiated prices on key consumables.
· A 4% decrease in general
administration costs mainly at Buzwagi as a result of lower
warehousing and logistics expenditure.
This was offset by:
· An 8% increase in contracted
services mainly as a result of increased underground mining
activity at North Mara as a result of the ramp up in underground
production, combined with increased maintenance contractor charges
at Buzwagi.
· A 4% increase in maintenance
costs mainly at Buzwagi and North Mara driven by higher maintenance
supplies as a result of major component change outs and increased
equipment breakdowns.
Capitalised direct mining costs, consisting of capitalised
development costs and investment in inventory is made up as
follows:
(US$'000) |
|
|
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
|
|
2016 |
2015 |
|
2016 |
2015 |
Capitalised direct
mining costs |
|
|
|
|
|
|
|
Capitalised
development costs |
|
|
(33,704) |
(20,766) |
|
(119,905) |
(88,218) |
Drawdown of/
(investment in) inventory |
|
|
731 |
(4,840) |
|
(17,941) |
(29,743) |
Total capitalised
direct mining costs |
|
|
(32,973) |
(25,606) |
|
(137,846) |
(117,961) |
Capitalised development costs were 36% higher than 2015, mainly
driven by increased capitalised waste stripping costs related to
the Nyabirama pit at North Mara. The investment in inventory was
US$17.9 million, 40% lower than in
2015 due to an increased proportion of costs allocated to cost of
sales due to an overall lower average cost valuation given lower
operating costs, partially offset by an increased build-up of ore
stockpiles at Buzwagi.
Central costs
Total central costs amounted to US$51.8
million for 2016, a 30% increase on 2015 (US$40.0 million) mainly driven by an increased
share-based payment expense as a result of the stronger share price
performance compared to 2015, specifically when compared to our
peers and the global mining index, impacting on the valuation of
future share-based payment liabilities to employees. Acacia’s share
price increased by 108% compared to 2015. This was partly offset by
36% lower corporate administration costs as a result of the
corporate office restructuring and cost saving initiatives mainly
around personnel cost, consulting fees and professional services
and overall lower general administration costs.
(US$'000) |
|
|
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
|
|
2016 |
2015 |
|
2016 |
2015 |
Corporate
administration |
|
|
6,219 |
7,308 |
|
21,895 |
34,455 |
Share-based
payments |
|
|
(9,795) |
(284) |
|
29,929 |
5,537 |
Total central
costs |
|
|
(3,576) |
7,024 |
|
51,824 |
39,992 |
Exploration and evaluation costs
Exploration and evaluation costs of US$24.0 million were incurred in 2016, 22% higher
than the US$19.8 million spent in
2015. The key focus areas for the period were greenfield
exploration programmes in West
Kenya amounting to US$10.6
million, greenfield exploration programmes in West Africa amounting to US$7.5 million and brownfield exploration at
Bulyanhulu of US$3.5 million.
Corporate social responsibility
expenses
Corporate social responsibility costs incurred for 2016 amounted
to US$10.7 million compared to the
prior year of US$12.9 million.
Corporate social responsibility overheads and central initiatives
in 2016 amounted to US$4.5 million
and was lower compared to US$5.3
million in 2015. General community projects funded from the
Acacia Maendeleo Fund amounted to US$6.1
million, which was US$1.4
million lower than in 2015.
Other income
Other income in 2016 amounted to US$11.6
million, compared to an expense of US$28.1 million in 2015. The main contributors
include Acacia’s ongoing programme of zero cost collar
contracts to mitigate the negative impact of copper, rand and fuel
market volatility, in combination with zero cost collars relating
to Buzwagi gold production, which resulted in a combined
mark-to-market revaluation gain of US$13.0
million (as these arrangements do not qualify for hedge
accounting these unrealised gains are recorded through profit and
loss) and a reversal of indirect tax discounting provisions of
US$9.7 million as a result of
increased profitability which positively impacted the
recoverability of the MOS indirect tax receivable. The income was
partly offset by (i) retrenchment costs of US$6.9 million, (ii) legal costs of US$2.6 million and (iii) disallowed indirect
taxes of US$1.5 million and (iv)
other costs of US$ 4.8 million.
Finance expense and income
Finance expense of US$11.0 million
for 2016 was 12% lower than in 2015 (US$12.6
million). The key components were borrowing costs relating
to the Bulyanhulu CIL facility (US$4.6
million) which were lower than the prior year due to a lower
outstanding facility following the repayments, lower accretion
expenses of US$2.3 million relating
to the discounting of the environmental reclamation liability and
US$2.1 million relating to the
servicing of the US$150 million
undrawn revolving credit facility. Other costs include bank charges
and interest on finance leases.
Finance income relates predominantly to interest charged on
non-current receivables and interest received on money market
funds. Refer to note 9 of the condensed financial information for
details.
Taxation matters
The total income tax charge was of US$147.1 million compared to the prior year
expense of US$73.0 million. The
current tax charge of US$91.2 million
(2015: zero) was made up of current year income tax for North Mara,
driven by year to date profitability, of US$54.5 million and provisions for uncertain tax
positions in respect of prior years raised for North Mara
(US$30.4 million) and Tulawaka
(US$4.4 million) as a result of
adverse tax rulings in Q1 2016. The deferred tax charges of
US$55.9 million (2015: US$73.0 million) reflects provisions for
uncertain tax positions raised in Q1 2016 for Bulyanhulu
(US$35.0 million) and movements in
temporary differences of US$20.9
million. The effective tax rate in 2016 amounted to 61%
compared to 59% in 2015.
Net earnings and earnings per
share
As a result of the factors discussed above, net earnings for
2016 were US$94.9 million, against
the prior year loss of US$197.1
million.
Earnings per share for 2016 amounted to US23.2 cents, an
increase of US71.3 cents from the prior year loss per share of
US48.1 cents. The increase was driven by the higher earnings, with
no change in the underlying issued shares.
Adjusted net earnings and adjusted
earnings per share
Adjusted net earnings of for the year was US$161.0 million compared to US$6.8 million in 2015. Net earnings in the year
as described above have been adjusted for the impact of items such
as prior year tax provisions, discounting of indirect tax
receivables, restructuring costs, insurance proceeds as well as
legal settlements. Refer to page 28 for reconciliation between net
profit and adjusted net earnings.
Adjusted earnings per share for 2016 amounted to US39.2 cents,
an increase of US37.5 cents from the prior year adjusted earnings
per share of US1.7 cents.
Financial position
Acacia had cash and cash equivalents on hand of US$317.8 million as at 31
December 2016 (US$233.3
million as at 31 December
2015). The Group’s cash and cash equivalents are with
counterparties whom the Group considers to have an appropriate
credit rating. Location of credit risk is determined by physical
location of the bank branch or counterparty. Investments are held
mainly in United States dollars,
with cash and cash equivalents in other foreign currencies
maintained for operational requirements.
During 2013, a US$142 million
facility (“Facility”) was put in place to fund the bulk of the
costs of the construction of the Bulyanhulu tailings retreatment
project (“Project”). The Facility is collateralised by the Project,
and has a term of seven years with a spread over Libor of 250 basis
points. The seven year Facility is repayable in equal instalments
(bi-annual) over the term of the Facility, after a two year
repayment holiday period. The interest rate has been fixed at 3.6%
through the use of an interest rate swap. The full facility of
US$142 million was drawn in 2013.
During 2016, the 2nd and 3rd repayments
amounting to US$28.4 million in total
were made. At 31 December 2016, the
outstanding capital balance is US$99.4
million (31 December 2015:
US$127.8 million).
The above complements the existing undrawn revolving credit
facility of US$150 million, which
runs until November 2019.
The net book value of property, plant and equipment increased
from US$1.39 billion as at
31 December 2015 to US$1.44 billion as at 31
December 2016. The main capital expenditure drivers have
been explained above, and have been offset by depreciation charges
of US$163.8 million. Refer to note 13
to the condensed financial information for further details.
Total indirect tax receivables increased from US$110.2 million as at 31
December 2015 to US$136.4
million as at 31 December
2016. The increase was mainly due to a significant delay in
VAT refunds in 2016 as a result of ongoing audits by the Tanzanian
Revenue Authority on submitted VAT returns and a reduction in the
discounting provision for MOS indirect tax receivables of
US$9.7 million. Our gross increase in
receivables, before the corporate tax prepayment offset, amounted
to US$64.8 million. This was partly
offset by corporate tax prepayments of US$20.0 million and provisional tax payments of
US$20.9 million with the net increase
in receivables being US$26.2
million.
The net deferred tax position increased from a liability of
US$84.0 million as at 31 December 2015 to a liability of US$140.0 million as at 31
December 2016. This was mainly as a result of the tax
provisions raised in Q1 2016 as discussed above which utilised some
of the carry forward losses and movements in temporary
differences.
Net assets increased from US$1.79
billion as at 31 December 2015
to US$1.85 billion as at 31 December 2016. The increase reflects the
current year income of US$95.0
million, the payment of the final 2015 dividend of
US$11.5 million and the payment of
the 2016 interim dividend of US$8.1
million.
Cash flow generation and capital
management
Cash flow
(US$000) |
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
2016 |
2015 |
|
2016 |
2015 |
Cash generated from
operating activities |
60,933 |
45,110 |
|
317,976 |
156,465 |
Cash used in investing
activities |
(45,107) |
(37,964) |
|
(185,163) |
(181,436) |
Cash (used in)/
provided by financing activities |
- |
- |
|
(48,032) |
(32,270) |
Increase(decrease) in
cash |
15,826 |
7,146 |
|
84,781 |
(57,241) |
Foreign exchange
difference on cash |
(96) |
(251) |
|
(258) |
(3,341) |
Opening cash
balance |
302,061 |
226,373 |
|
233,268 |
293,850 |
Closing cash
balance |
317,791 |
233,268 |
|
317,791 |
233,268 |
Cash flow from operating activities was US$318.0 million for 2016, an increase of
US$161.5 million from 2015
(US$156.5 million). The increase
relates to a higher operating profit due to higher gold sales
volumes and lower operating costs, partly offset by unfavourable
working capital outflows of US$17.6
million compared to outflows of US$4.8 million in 2015 and the impact of higher
non-cash expenses of US$23.9 which
include unrealised gains on derivatives of US$13.0 million and discounting of indirect taxes
of US$9.7 million. This was further
offset by provisional income tax paid of US$20.9 million, and a US$20.0 million prepayment of corporate tax as
agreed with the Tanzanian Government.
The working capital outflow relates to cash share based payments
of US$36.0 million offset by non-cash
revaluation charges of future share based payments of US$29.9 million, a net increase in indirect tax
receivables on a cash basis of US$17.5
million, a net increase in inventories on hand of
US$8.3 million due to the higher
production base and timing of sales, which was offset by an
increase in payables of US$15.9
million due to the timing of payments.
Cash flow used in investing activities was US$185.2 million for 2016, an increase of 2% when
compared to 2015 (US$181.4 million),
driven by higher capitalised development mainly at North Mara,
partly offset by lower sustaining capital expenditure at Bulyanhulu
and Buzwagi.
A breakdown of total capital and other investing capital
activities for 2016 is provided below:
(US$’000) |
|
|
Year ended 31 December |
(Unaudited) |
|
|
2016 |
2015 |
|
|
|
|
|
Sustaining
capital |
|
|
(51,291) |
(83,331) |
Capitalised
development |
|
|
(138,691) |
(109,686) |
Expansionary
capital |
|
|
(3,660) |
(5) |
Total cash
capital |
|
|
(193,643) |
(193,022) |
Non-current asset
movement1 |
|
|
8,480 |
11,586 |
Cash used in
investing activities |
|
|
(185,163) |
(181,436) |
Capital expenditure
reconciliation: |
|
|
|
|
Total cash
capital |
|
|
193,643 |
193,022 |
Land purchases |
|
|
4,759 |
6,449 |
Movement in capital
accruals |
|
|
(2,504) |
(15,854) |
Capital
expenditure |
|
|
195,898 |
183,617 |
Land purchases
classified as long term prepayments |
|
|
(4,759) |
(6,449) |
Non-cash
rehabilitation asset adjustment |
|
|
21,955 |
(31,936) |
Total capital
expenditure per segment note |
|
|
213,094 |
145,232 |
1 Non-current asset movements relates to the movement
in Tanzania government receivables
and other long term assets.
Sustaining capital
Sustaining capital expenditure includes investments in tailings
and infrastructure (US$16.8 million),
investment in mobile equipment and component change-outs
(US$31.3 million), investment in the
Bulyanhulu winder upgrade (US$2.0
million) and other sustaining capital expenditure across
sites of US$5.4 million. During the
year, capital accruals from December
2015 of US$2.5 million were
paid.
Capitalised development
Capitalised development includes North Mara capitalised
stripping costs (US$57.1 million) and
capitalised underground development (US$18.5
million) and Bulyanhulu capitalised underground development
costs (US$63.1 million)
Expansionary capital
Expansionary capital expenditure consisted mainly of capitalised
expansion drilling at North Mara (US$2.4
million) and Bulyanhulu (US$1.3
million).
Non-cash capital
Non-cash capital was US$19.5
million and consisted mainly of reclamation asset
adjustments (US$22.0 million) and a
decrease in capital accruals (US$2.5
million). The reclamation adjustments were driven by changes
in US risk free rates driving lower discount rates and increased
closure costs assumptions.
Other investing capital
During 2016 North Mara incurred land purchases totalling
US$4.8 million (2015: US$6.4 million).
Cash flow used in financing activities for 2016 of
US$48.0 million, an increase of
US$15.7 million from US$32.3 million in 2015. The outflow relates to
payment of the final 2015 dividend of US$11.5 million, the 2016 interim dividend of
US$8.1 and the payment of the
2nd and 3rd instalments of the borrowings
related to the Bulyanhulu CIL facility totalling US$28.4 million.
Dividend
The final 2015 dividend of US2.8 cents per share was paid to
shareholders on 27 May 2016 and the
interim dividend of US2.0 cents per share was paid to shareholders
on 25 September 2015. The Board of
Directors have recommended a final dividend for 2016 of US8.4 cents
per share, payable to shareholders in May
2016.
Significant judgements in applying
accounting policies and key sources of estimation uncertainty
Many of the amounts included in the condensed consolidated
financial information require management to make judgements and/or
estimates. These judgements and estimates are continuously
evaluated and are based on management’s experience and best
knowledge of the relevant facts and circumstances, but actual
results may differ from the amounts included in the condensed
consolidated financial information included in this release.
Information about such judgements and estimation is included in the
accounting policies and/or notes to the consolidated financial
statements, and the key areas are summarised below.
Areas of judgement and key sources of estimation uncertainty
that have the most significant effect on the amounts recognised in
the condensed consolidated financial statements include:
· Estimates of the quantities of
proven and probable gold and copper reserves;
· Estimates included within the
life-of-mine planning such as the timing and viability of
processing of long term stockpiles;
· The capitalisation of production
stripping costs;
· The capitalisation of
exploration and evaluation expenditures;
· Review of goodwill, tangible and
intangible assets’ carrying value, the determination of whether a
trigger for an impairment review exist, whether these assets are
impaired and the measurement of impairment charges or reversals,
and also includes the judgement of reversal of any previously
recorded impairment charges;
· The estimated fair values of
cash generating units for impairment tests, including estimates of
future costs to produce proven and probable reserves, future
commodity prices, foreign exchange rates and discount rates;
· The estimated useful lives of
tangible and long-lived assets and the measurement of depreciation
expense;
· Recognition of a provision for
environmental rehabilitation and the estimation of the
rehabilitation costs and timing of expenditure;
· Whether to recognise a liability
for loss contingencies and the amount of any such provision;
· Whether to recognise a provision
for accounts receivable, and in particular the indirect tax
receivables from the Tanzanian Government, a provision for
obsolescence on consumables inventory and the impact of discounting
the non-current element of the indirect tax receivable;
· Recognition of deferred income
tax assets, amounts recorded for uncertain tax positions, the
measurement of income tax expense and indirect taxes;
· Determination of the cost
incurred in the productive process of ore stockpiles, gold in
process, gold doré/bullion and concentrate, as well as the
associated net realisable value and the split between the long term
and short term portions;
· Determination of fair value of
derivative instruments; and
· Determination of fair value of
share options and cash-settled share-based payments.
Non-IFRS Measures
Acacia has identified certain measures in this report that are
not measures defined under IFRS. Non-IFRS financial measures
disclosed by management are provided as additional information to
investors in order to provide them with an alternative method for
assessing Acacia’s financial condition and operating results, and
reflects more relevant measures for the industry in which Acacia
operates. These measures are not in accordance with, or a
substitute for, IFRS, and may be different from or inconsistent
with non-IFRS financial measures used by other companies. These
measures are explained further below.
Net average realised gold price per ounce sold is a
non-IFRS financial measure which excludes from gold revenue:
- Unrealised gains and losses on non-hedge derivative contracts;
and
- Export duties
It also includes realised gains and losses on gold hedge
contracts reported as part of cost of sales.
Net average realised gold price per ounce sold have been
calculated as follow:
(US$000) |
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
2016 |
2015 |
|
2016 |
2015 |
Gold revenue |
253,957 |
219,839 |
|
1,014,468 |
832,462 |
Less: Realised gold
hedge losses |
(487) |
- |
|
(1,818) |
- |
Net gold revenue |
253,470 |
219,839 |
|
1,012,651 |
832,462 |
Gold sold
(ounces) |
209,292 |
198,617 |
|
816,743 |
721,203 |
Net average realised
gold price (US$/ounce) |
1,211 |
1,107 |
|
1,240 |
1,154 |
Cash cost per ounce sold is a non-IFRS financial measure.
Cash costs include all costs absorbed into inventory, as well as
royalties, and production taxes, and exclude capitalised production
stripping costs, inventory purchase accounting adjustments,
unrealised gains/losses from non-hedge currency and commodity
contracts, depreciation and amortisation and corporate social
responsibility charges. Cash cost is calculated net of co-product
revenue. Cash cost per ounce sold is calculated by dividing the
aggregate of these costs by total ounces sold.
The presentation of these statistics in this manner allows
Acacia to monitor and manage those factors that impact production
costs on a monthly basis. Cash costs and cash cost per ounce sold
are calculated on a consistent basis for the periods presented.
The table below provides a reconciliation between cost of sales
and total cash cost to calculate the cash cost per ounce sold.
(US$'000) |
|
|
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
|
|
2016 |
2015 |
|
2016 |
2015 |
Total cost of
sales |
|
|
196,314 |
196,874 |
|
727,080 |
734,167 |
Deduct: depreciation
and amortisation* |
|
|
(43,718) |
(43,364) |
|
(163,796) |
(141,697) |
Deduct: realised
losses on gold hedges |
|
|
(487) |
- |
|
(1,818) |
- |
Deduct: Co-product
revenue |
|
|
(9,932) |
(8,829) |
|
(39,063) |
(35,669) |
Total cash
cost |
|
|
142,177 |
144,681 |
|
522,403 |
556,801 |
|
|
|
|
|
|
|
|
Total ounces sold |
|
|
209,292 |
198,617 |
|
816,743 |
721,203 |
Total cash cost per
ounce sold |
|
|
679 |
728 |
|
640 |
772 |
* Depreciation and amortisation includes the depreciation
component of the cost of inventory sold
All-in sustaining cost (AISC) is a non-IFRS financial
measure. The measure is in accordance with the World Gold Council’s
guidance issued in June 2013. It is
calculated by taking cash cost per ounce sold and adding corporate
administration costs, share-based payments, reclamation and
remediation costs for operating mines, corporate social
responsibility expenses, mine exploration and study costs, realised
gains and/or losses on operating hedges, capitalised stripping and
underground development costs and sustaining capital expenditure.
This is then divided by the total ounces sold. A reconciliation
between cash cost per ounce sold and AISC for the key business
segments is presented below:
(Unaudited) |
Three months ended 31 December 2016 |
|
Three months ended 31 December 2015 |
(US$/oz sold) |
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
Cash cost per ounce
sold |
784 |
436 |
1,035 |
679 |
|
653 |
604 |
1,101 |
728 |
Corporate
administration |
17 |
17 |
25 |
30 |
|
58 |
58 |
63 |
37 |
Share based
payments |
(21) |
(14) |
(20) |
(47) |
|
0 |
(1) |
(1) |
(1) |
Rehabilitation |
8 |
9 |
2 |
7 |
|
4 |
16 |
3 |
9 |
CSR expenses |
7 |
19 |
7 |
15 |
|
9 |
26 |
4 |
17 |
Capitalised
development |
214 |
236 |
- |
181 |
|
146 |
152 |
- |
118 |
Sustaining
capital |
52 |
147 |
7 |
87 |
|
129 |
77 |
66 |
96 |
Total AISC |
1,061 |
850 |
1,056 |
952 |
|
999 |
932 |
1,236 |
1,004 |
* The group total includes a credit
of US$14/oz of unallocated corporate
related costs in Q4 2016, and a cost of US$18/oz in Q4 2015.
(Unaudited) |
Year ended 31 December 2016 |
|
Year ended 31 December 2015 |
(US$/oz sold) |
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
|
Bulyanhulu |
North
Mara |
Buzwagi |
Group* |
Cash cost per ounce
sold |
722 |
410 |
1,031 |
640 |
|
797 |
590 |
1,046 |
772 |
Corporate
administration |
21 |
21 |
26 |
27 |
|
52 |
48 |
50 |
48 |
Share based
payments |
2 |
2 |
3 |
37 |
|
2 |
0 |
(0) |
8 |
Rehabilitation |
7 |
9 |
3 |
7 |
|
6 |
22 |
6 |
12 |
CSR expenses |
6 |
15 |
10 |
13 |
|
11 |
19 |
11 |
18 |
Capitalised
development |
226 |
201 |
0 |
170 |
|
225 |
167 |
9 |
152 |
Sustaining
capital |
74 |
75 |
22 |
64 |
|
160 |
69 |
65 |
102 |
Total AISC |
1,058 |
733 |
1,095 |
958 |
|
1,253 |
915 |
1,187 |
1,112 |
* The group total includes
US$43/oz of unallocated corporate
related costs in 2016, and a cost of US$10/oz in 2015.
AISC is intended to provide additional information on the total
sustaining cost for each ounce sold, taking into account
expenditure incurred in addition to direct mining costs and selling
costs.
Cash cost per tonne milled is a non-IFRS financial
measure. Cash costs include all costs absorbed into inventory, as
well as royalties, co-product credits, and production taxes, and
exclude capitalised production stripping costs, inventory purchase
accounting adjustments, unrealised gains/losses from non-hedge
currency and commodity contracts, depreciation and amortisation and
corporate social responsibility charges. Cash cost is calculated
net of co-product revenue. Cash cost per tonne milled is calculated
by dividing the aggregate of these costs by total tonnes
milled.
EBITDA is a non-IFRS financial measure. Acacia calculates
EBITDA as net profit or loss for the period excluding:
- Income tax expense;
- Finance expense;
- Finance income;
- Depreciation and amortisation; and
- Impairment charges of goodwill and other
long-lived assets.
EBITDA is intended to provide additional information to
investors and analysts. It does not have any standardised meaning
prescribed by IFRS and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with IFRS. EBITDA excludes the impact of cash costs of financing
activities and taxes, and the effects of changes in operating
working capital balances, and therefore is not necessarily
indicative of operating profit or cash flow from operations as
determined under IFRS. Other companies may calculate EBITDA
differently.
A reconciliation between net profit for the period and EBITDA is
presented below:
(US$000) |
Three months ended 31 December |
|
Year ended 31 December |
(Unaudited) |
2016 |
2015 |
|
2016 |
2015 |
Net profit/ (loss) for
the period |
48,285 |
(198,860) |
|
94,944 |
(197,148) |
Plus income tax
expense/(credit) |
11,399 |
64,295 |
|
147,113 |
72,988 |
Plus depreciation and
amortisation |
43,718 |
43,364 |
|
163,796 |
141,697 |
Plus: impairment
charges/write-offs |
- |
146,201 |
|
- |
146,201 |
Plus finance
expense |
2,644 |
2,888 |
|
11,047 |
12,617 |
Less finance
income |
(365) |
(258) |
|
(1,512) |
(1,384) |
EBITDA |
105,681 |
57,630 |
|
415,388 |
174,971 |
*Depreciation and amortisation includes the depreciation
component of the cost of inventory sold.
Adjusted EBITDA is a non-IFRS financial measure. It is
calculated by excluding one-off costs or credits relating to
non-routine transactions from EBITDA. It excludes other credits and
charges that, individually or in aggregate, if of a similar type,
are of a nature or size that requires explanation in order to
provide additional insight into the underlying business
performance. EBITDA is adjusted for items (a) to (e) as contained
in the reconciliation to adjusted net earnings below.
EBIT is a non-IFRS financial measure and reflects EBITDA
adjusted for depreciation and amortisation and goodwill impairment
charges.
Adjusted net earnings is a non-IFRS financial measure. It
is calculated by excluding certain costs or credits relating to
non-routine transactions from net profit attributed to owners of
the parent. It includes other credit and charges that, individually
or in aggregate, if of a similar type, are of a nature or size that
requires explanation in order to provide additional insight into
the underlying business performance.
Adjusted net earnings and adjusted earnings per share have been
calculated as follows:
(US$000) |
Three months ended 31 December |
|
Year ended 31 December |
|
(Unaudited) |
2016 |
2015 |
|
2016 |
2015 |
Net
earnings/(loss) |
48,285 |
(198,860) |
|
94,944 |
(197,148) |
Adjusted for: |
|
|
|
|
|
Impairment charges
(a) |
- |
146,201 |
|
- |
146,201 |
Restructuring cost
(b) |
3,995 |
8,384 |
|
7,689 |
9,864 |
One off legal
settlements/recoveries (c) |
(3,455) |
4,371 |
|
(3,455) |
7,300 |
Discounting of
indirect taxes (d) |
(3,211) |
(5,906) |
|
(9,719) |
(5,906) |
Reversal of contingent
liability (e) |
- |
(5,313) |
|
- |
(5,313) |
Prior year tax
positions recognised 1 |
- |
12,740 |
|
69,916 |
12,740 |
Tax impact of the
above |
801 |
40,423 |
|
1,646 |
39,100 |
Adjusted net
earnings |
46,415 |
2,040 |
|
161,021 |
6,838 |
1 For the year ended 31
December 2016, US$69.9 million
represents a provision raised for the implied impact of an adverse
tax ruling made by the Tanzanian Court of Appeal with respect to
historical tax assessments of Bulyanhulu. As reported in Q1 2016,
the impact of the ruling was calculated for Bulyanhulu and
extrapolated to North Mara and Tulawaka as well and covers results
up to the end of 2015. On a site basis, US$35.1 million was raised for Bulyanhulu,
US$30.4 million for North Mara and
US$4.4 million for Tulawaka.
Adjusted net earnings per share is a non-IFRS financial
measure and is calculated by dividing adjusted net earnings by the
weighted average number of Ordinary Shares in issue.
Free cash flow is a non-IFRS measure and represents the
change in cash and cash equivalents in a given period.
Net cash is a non-IFRS measure. It is calculated by
deducting total borrowings from cash and cash equivalents.
Mining statistical information
The following describes certain line items used in the Acacia
Group’s discussion of key performance indicators:
- Open pit material mined – measures in tonnes the total
amount of open pit ore and waste mined.
- Underground ore tonnes hoisted – measures in tonnes the
total amount of underground ore mined and hoisted.
- Underground ore tonnes trammed – measures in tonnes the
total amount of underground ore mined and trammed.
- Total tonnes mined includes open pit material plus
underground ore tonnes hoisted.
- Strip ratio – measures the ratio of waste?to?ore for
open pit material mined.
- Ore milled – measures in tonnes the amount of ore
material processed through the mill.
- Head grade – measures the metal content of mined ore
going into a mill for processing.
- Milled recovery – measures the proportion of valuable
metal physically recovered in the processing of ore. It is
generally stated as a percentage of the metal recovered compared to
the total metal originally present.
Risk Review
For 2016 our principal risks have continued to fall within four
broad categories: strategic risks, financial risks, external risks
and operational risks. Generally, the makeup of our principal risks
has not significantly changed throughout the year. However, there
have been changes in certain risk profiles as a result of
developments in our operating environment and developments or
trends affecting the wider global economy and/or the mining
industry.
As a result of the review, at the end of 2016 we viewed our
principal risks as relating to the following:
· Security, trespass and
vandalism
· Political, legal and regulatory
developments
· Safety risks relating to mining
operations
· Equipment effectiveness
· Environmental hazards and
rehabilitation
· Implementation of enhanced
operational systems
· Continuity of power supply
· Significant changes to commodity
prices
· Single country risk
Further details as regards our Principal Risks and Uncertainties
and risk assessments conducted in respect thereof will be provided
as part of the 2016 Annual Report and Accounts.
Condensed Financial Information
Consolidated income statement
|
|
For the year ended
31 December |
For
the year ended
31 December |
|
|
(Unaudited) |
(Audited) |
(in thousands of
United States dollars) |
Notes |
2016 |
2015 |
|
|
|
|
|
|
|
|
Revenue |
5 |
1,053,532 |
868,131 |
Cost of sales |
|
(727,080) |
(734,167) |
Gross
profit |
|
326,452 |
133,964 |
Corporate
administration |
|
(21,895) |
(34,455) |
Share-based
payments |
|
(29,929) |
(5,537) |
Exploration and
evaluation costs |
6 |
(24,020) |
(19,737) |
Corporate social
responsibility expenses |
|
(10,665) |
(12,882) |
Impairment
charges |
7 |
- |
(146,201) |
Other
income/(charges) |
8 |
11,649 |
(28,079) |
Profit/(Loss)
before net finance expense and taxation |
|
251,592 |
(112,927) |
Finance income |
9 |
1,512 |
1,384 |
Finance expense |
9 |
(11,047) |
(12,617) |
Profit/(Loss)
before taxation |
|
242,057 |
(124,160) |
Tax expense |
10 |
(147,113) |
(72,988) |
Net profit /(loss)
for the year |
|
94,944 |
(197,148) |
|
|
|
|
Earnings per
share: |
|
|
|
Basic earnings/(loss)
per share (cents) |
11 |
23.2 |
(48.1) |
Diluted
earnings/(loss) per share (cents) |
11 |
23.1 |
(48.1) |
|
|
|
|
|
The notes on pages 36 to 56 are an integral part of this
financial information.
Consolidated statement of
comprehensive income
|
|
For the year ended
31 December |
For
the year ended
31 December |
|
|
(Unaudited) |
(Audited) |
(in thousands of
United States dollars) |
|
2016 |
2015 |
|
|
|
|
Net profit/(loss) for
the year |
|
94,944 |
(197,148) |
Other comprehensive
income: |
|
|
|
Items that may be
subsequently reclassified to profit or loss: |
|
|
|
Changes in fair value
of cash flow hedges |
|
7 |
(459) |
Total comprehensive
income/(expense) for the year |
|
94,951 |
(197,607) |
|
|
|
|
|
The notes on pages 36 to 56 are an integral part of this
financial information.
Consolidated balance sheet
|
|
As
at
31 December |
As
at
31 December |
|
|
(Unaudited) |
(Audited) |
(in thousands of
United States dollars) |
Notes |
2016 |
2015 |
ASSETS |
|
|
|
Non-current
assets |
|
|
|
Goodwill and
intangible assets |
|
216,190 |
211,190 |
Property, plant and
equipment |
13 |
1,443,176 |
1,390,713 |
Deferred tax
assets |
14 |
8,431 |
11,628 |
Non-current portion of
inventory |
|
98,936 |
72,616 |
Derivative financial
instruments |
15 |
821 |
849 |
Other assets |
16 |
63,297 |
114,964 |
|
|
1,830,851 |
1,801,960 |
Current
assets |
|
|
|
Inventories |
|
184,313 |
202,321 |
Trade and other
receivables |
17 |
18,830 |
14,363 |
Derivative financial
instruments |
15 |
1,343 |
- |
Other current
assets |
17 |
149,518 |
78,563 |
Cash and cash
equivalents |
|
317,791 |
233,268 |
|
|
671,795 |
528,515 |
Total
assets |
|
2,502,646 |
2,330,475 |
EQUITY AND
LIABILITIES |
|
|
|
Share capital and
share premium |
|
929,199 |
929,199 |
Other reserves |
|
933,696 |
858,300 |
|
|
1,862,895 |
1,787,499 |
Total
equity |
|
1,862,895 |
1,787,499 |
Non-current
liabilities |
|
|
|
Borrowings |
18 |
71,000 |
99,400 |
Deferred tax
liabilities |
14 |
148,390 |
95,668 |
Derivative financial
instruments |
15 |
30 |
1,560 |
Provisions |
19 |
145,722 |
127,354 |
Other non-current
liabilities |
|
15,699 |
4,122 |
|
|
380,841 |
328,104 |
Current
liabilities |
|
|
|
Trade and other
payables |
|
222,543 |
159,866 |
Borrowings |
18 |
28,400 |
28,400 |
Derivative financial
instruments |
15 |
584 |
10,920 |
Provisions |
19 |
7,235 |
1,577 |
Other current
liabilities |
|
148 |
14,109 |
|
|
258,910 |
214,872 |
Total
liabilities |
|
639,751 |
542,976 |
|
|
|
|
Total equity and
liabilities |
|
2,502,646 |
2,330,475 |
The notes on pages 36 to 56 are an integral part of this
financial information.
Statement of changes in equity
(Unaudited) |
|
Share
capital |
Share
premium |
Contributed surplus/Other reserve |
Cash
flow hedging reserve |
Stock
option reserve |
(in thousands of
United States dollars) |
|
|
|
|
|
|
Balance at 1
January 2015 (Audited) |
|
62,097 |
867,102 |
1,368,713 |
1,011 |
3,694 |
Total comprehensive
expense for the period |
|
- |
- |
- |
(459) |
- |
Share option
grants |
|
- |
- |
- |
- |
182 |
Transactions with
non-controlling interest holders |
|
- |
- |
- |
- |
- |
Dividends to equity
holders of the Company |
|
- |
- |
- |
- |
- |
Balance at 31
December 2015 (Audited) |
|
62,097 |
867,102 |
1,368,713 |
552 |
3,876 |
Total comprehensive
income for the period |
|
- |
- |
- |
7 |
- |
Share option
grants |
|
- |
- |
- |
- |
77 |
Transactions with
non-controlling interest holders |
|
- |
- |
- |
- |
- |
Dividends to equity
holders of the Company |
|
- |
- |
- |
- |
- |
Balance at 31
December 2016 (Unaudited) |
|
62,097 |
867,102 |
1,368,713 |
559 |
3,953 |
(Unaudited) |
|
Accumulated losses |
Total
owners' equity |
Total
non- controlling interests |
Total
equity |
|
(in thousands of
United States dollars) |
|
|
|
|
|
|
Balance at 1
January 2015 (Audited) |
|
(305,250) |
1,997,367 |
4,781 |
2,002,148 |
Total comprehensive
expense for the period |
|
(197,148) |
(197,607) |
- |
(197,607) |
Share option
grants |
|
- |
182 |
- |
182 |
Transactions with
non-controlling interest holders |
|
4,781 |
4,781 |
(4,781) |
- |
Dividends to equity
holders of the Company |
|
(17,224) |
(17,224) |
- |
(17,224) |
Balance at 31
December 2015 (Audited) |
|
(514,841) |
1,787,499 |
- |
1,787,499 |
Total comprehensive
income for the period |
|
94,944 |
94,951 |
- |
94,951 |
Share option
grants |
|
- |
77 |
- |
77 |
Transactions with
non-controlling interest holders |
|
- |
- |
- |
- |
Dividends to equity
holders of the Company |
|
(19,632) |
(19,632) |
- |
(19,632) |
Balance at 31
December 2016 (Unaudited) |
|
(439,529) |
1,862,895 |
- |
1,862,895 |
The notes on pages 36 to 56 are an integral part of this
financial information.
Consolidated statement of cash
flows
|
|
For the year ended
31 December |
For
the year
ended
31 December |
|
|
(Unaudited) |
(Audited) |
(in thousands of
United States dollars) |
Notes |
2016 |
2015 |
Cash flows from
operating activities |
|
|
|
Net profit/(loss) for
the period |
|
94,944 |
(197,148) |
Adjustments for: |
|
|
|
Tax
expense |
|
147,113 |
72,988 |
Depreciation
and amortisation |
|
156,301 |
133,365 |
Finance
items |
|
9,535 |
11,233 |
Impairment
charges |
|
- |
146,201 |
Profit on
disposal of property, plant and equipment |
|
(289) |
(1,315) |
Working capital
movements |
12 |
(58,497) |
(4,774) |
Other non-cash
items |
12 |
(23,850) |
3,497 |
Cash generated from
operations before interest and tax |
|
325,257 |
164,047 |
Finance income |
|
1,512 |
1,384 |
Finance expenses |
|
(8,793) |
(8,966) |
Cash generated by
operating activities |
|
317,976 |
156,465 |
|
|
|
|
Cash flows from
investing activities |
|
|
|
Purchase of property,
plant and equipment |
|
(193,643) |
(193,022) |
Movement in other
assets |
|
6,952 |
8,330 |
Acquired mineral
interest |
|
(5,000) |
- |
Other investing
activities |
12 |
6,528 |
3,256 |
Cash used in
investing activities |
|
(185,163) |
(181,436) |
|
|
|
|
Cash flows from
financing activities |
|
|
|
Loans paid |
|
(28,400) |
(14,200) |
Dividends paid |
|
(19,632) |
(17,224) |
Finance lease
instalments |
|
- |
(846) |
Net cash generated
used in financing activities |
|
(48,032) |
(32,270) |
|
|
|
|
Net decrease in cash
and cash equivalents |
|
84,781 |
(57,241) |
Net foreign exchange
difference |
|
(258) |
(3,341) |
Cash and cash
equivalents at 1 January |
|
233,268 |
293,850 |
Cash and cash
equivalents at period end |
|
317,791 |
233,268 |
|
|
|
|
|
|
|
|
|
The notes on pages 36 to 56 are an integral part of this
financial information.
Notes to the condensed financial
information
1. General Information
Acacia Mining plc, formerly African Barrick Gold plc (the
“Company”, "Acacia” or collectively with its subsidiaries the
“Group”) was incorporated on 12 January
2010 and re-registered as a public limited company on
12 March 2010 under the Companies Act
2006. It is registered in England
and Wales with registered number
7123187.
On 24 March 2010 the Company’s
shares were admitted to the Official List of the United Kingdom
Listing Authority (“UKLA”) and to trading on the Main Market of the
London Stock Exchange, hereafter referred to as the Initial Public
Offering (“IPO”). The address of its registered office is No.1
Cavendish Place, London, W1G
0QF.
Barrick Gold Corporation (“Barrick”) currently owns
approximately 63.9% of the shares of the Company and is the
ultimate parent and controlling party of the Group. The
financial statements of Barrick can be obtained from
www.barrick.com.
The condensed consolidated financial information for the year
ended 31 December 2016 was approved
for issue by the Board of Directors of the Company on 13 February 2017. The condensed consolidated
financial information does not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. The condensed
consolidated financial information is unaudited.
The Group’s primary business is the mining, processing and sale
of gold. The Group has three operating mines located in
Tanzania. The Group also has a
portfolio of exploration projects located across Africa.
2. Basis of
Preparation of the condensed financial information
The financial information set out above does not constitute the
Group’s statutory accounts for the year ended 31 December 2016, but is derived from the Group’s
full financial accounts, which are in the process of being audited.
The Group’s full financial accounts will be prepared under
International Financial Reporting Standards as adopted by the
European Union.
The condensed consolidated financial information has been
prepared under the historical cost convention basis, as modified by
the revaluation of financial assets and financial liabilities
(including derivative instruments) at fair value through profit and
loss. The financial statements are presented in US dollars (US$)
and all monetary results are rounded to the nearest thousand
dollars (US) except when otherwise indicated.
Where a change in the presentational format between the prior
year and current year condensed consolidated financial information
has been made during the period, comparative figures have been
restated accordingly. No presentational changes were made in the
current year.
The group’s activities expose it to a variety of financial
risks: market risk (including currency risk, fair value interest
rate risk, cash flow interest rate risk and price risk), credit
risk and liquidity risk. The condensed financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the group’s annual financial statements as at
31 December 2015. There have been no
changes in the risk management department or in any risk management
policies since the year end.
The impact of the seasonality on operations is not considered as
significant on the condensed consolidated financial
information.
After making the appropriate enquiries, the Directors confirm
that they have a reasonable expectation that the Acacia Group will
continue to operate and meet its liabilities, as they fall due, for
the next three years. The Directors’ assessment has been made with
reference to the Acacia Group’s current position and prospects, its
strategy and the Acacia Group’s principal risks and how these are
managed, with particular regard to those which are viewed as having
the most relevance to Acacia continuing in operation, when assessed
in terms of financial and operational planning and impact over a
three-year period, being: environmental hazards and rehabilitation;
implementation of enhanced operational systems; significant change
to commodity prices; political, legal and regulatory developments;
safety risks relating to mining operations and equipment
effectiveness. On this basis this condensed consolidated financial
information is presented on a going concern basis.
3. Accounting
Policies
Accounting policies have remained consistent with the prior year
except for the adoption of new standards and amendments to
standards.
a) New and amended
standards adopted by the Group
The following amendments to standards are applicable and were
adopted by the Group for the first time for the financial year
beginning 1 January 2016:
· Amendments to IFRS 10, 'Consolidated
financial statements' and IAS 28,'Investments in associates and
joint ventures' on applying the consolidation exemption. The
amendments clarify the application of the consolidation exception
for investment entities and their subsidiaries. The amendment did
not have a significant impact on the Group financial
statements.
· Amendment to IFRS 11, 'Joint arrangements'
on acquisition of an interest in a joint operation. This amendment
adds new guidance on how to account for the acquisition of an
interest in a joint operation that constitutes a business. The
amendment did not have a significant impact on the Group financial
statements.
· Amendments to IAS 1,'Presentation of
financial statements' disclosure initiative. In December 2014 the IASB issued amendments to
clarify guidance in IAS 1 on materiality and aggregation, the
presentation of subtotals, the structure of financial statements
and the disclosure of accounting policies. The amendment did not
have a significant impact on the Group financial statements.
· Amendment to IAS 16,'Property, plant and
equipment' and IAS 38,'Intangible assets', on depreciation and
amortisation. In this amendment the IASB has clarified that the use
of revenue based methods to calculate the depreciation of an asset
is not appropriate because revenue generated by an activity that
includes the use of an asset generally reflects factors other than
the consumption of the economic benefits embodied in the asset. The
IASB has also clarified that revenue is generally presumed to be an
inappropriate basis for measuring the consumption of the economic
benefits embodied in an intangible asset. The amendment did not
have a significant impact on the Group financial statements.
· Amendments to IAS 27, 'Separate financial
statements' on equity accounting. In this amendment the IASB has
restored the option to use the equity method to account for
investments in subsidiaries, joint ventures and associates in an
entity’s separate financial statements. The amendment did not have
a significant impact on the Group financial statements.
· IFRS 5 ‘Non-current Assets Held for Sale and
Discontinued Operations’. This is an amendment to the changes in
methods of disposal – Assets (or disposal groups) are generally
disposed of either through sale or through distribution to owners.
The amendment to IFRS 5 clarifies that changing from one of these
disposal methods to the other should not be considered to be a new
plan of disposal, rather it is a continuation of the original plan.
There is therefore no interruption of the application of the
requirements in IFRS 5. The amendment also clarifies that changing
the disposal method does not change the date of classification. The
amendment did not have a significant impact on the Group financial
statements.
· IFRS 7 – ‘Financial Instruments:
Disclosures’. Applicability of the offsetting disclosures to
condensed interim financial statements. The amendment removes the
phrase ’and interim periods within those annual periods’ from
paragraph 44R, clarifying that these IFRS 7 disclosures are not
required in the condensed interim financial report. However, the
Board noted that IAS 34 requires an entity to disclose an
explanation of events and transactions that are significant to an
understanding of the changes in financial position and performance
of the entity since the end of the last annual reporting period’.
Therefore, if the IFRS 7 disclosures provide a significant update
to the information reported in the most recent annual report, the
Board would expect the disclosures to be included in the entity’s
condensed interim financial report. The amendment did not have a
significant impact on the Group financial statements.
· IAS 19 – ‘Employee Benefits’. Discount rate:
regional market issue - The amendment to IAS 19 clarifies that
market depth of high quality corporate bonds is assessed based on
the currency in which the obligation is denominated, rather than
the country where the obligation is located. When there is no deep
market for high quality corporate bonds in that currency,
government bond rates must be used. The amendment did not have a
significant impact on the Group financial statements.
b) New and amended
standards, and interpretations not yet adopted
The following standards and amendments to existing standards
have been published and are mandatory for the Group’s accounting
periods beginning on or after 1 January
2016:
· Amendments to IFRS 10, 'Consolidated
financial statements' and IAS 28,'Investments in associates and
joint ventures' on sale or contribution of assets. The IASB has
issued this amendment to eliminate the inconsistency between IFRS
10 and IAS 28. The IASB decided to defer the application date of
this amendment, until such time this is not applicable. The
amendment is however not expected to have a significant impact on
the Group.
· Amendments to IAS 12, ‘Recognition of
Deferred Tax Assets for Unrealised Losses’. Amendments made to IAS
12 will aim to clarify the accounting for deferred tax where an
asset is measured at fair value and that fair value is below the
asset’s tax base. Effective 1 January
2017. The amendment is however not expected to have a
significant impact on the Group.
· Amendments to IAS 7, ‘Disclosure
Initiative’. Going forward, entities will be required to explain
changes in their liabilities arising from financing activities.
This includes changes arising from cash flows (e.g. drawdowns and
repayments of borrowings) and non-cash changes such as
acquisitions, disposals, accretion of interest and unrealised
exchange differences. Changes in financial assets must be included
in this disclosure if the cash flows were, or will be, included in
cash flows from financing activities. Effective 1 January 2017. The amendment is however not
expected to have a significant impact on the Group.
· IFRS 15 – Revenue from contracts with
customers. This standard is a single, comprehensive revenue
recognition model for all contracts with customers to achieve
greater consistency in the recognition and presentation of revenue.
Revenue is recognised based on the satisfaction of performance
obligations, which occurs when control of good or service transfers
to a customer. Effective 1 January
2018. The standard is not expected to have a significant
impact on the Group.
· IFRS 9 – Financial Instruments (2009
&2010). The IASB has updated IFRS 9, ‘Financial instruments’ to
include guidance on financial liabilities and de-recognition of
financial instruments. The accounting and presentation for
financial liabilities and for derecognising financial instruments
has been relocated from IAS 39, ‘Financial instruments: Recognition
and measurement’, without change, except for financial liabilities
that are designated at fair value through profit or loss. .
Effective 1 January 2018. The
standard is not expected to have a significant impact on the
Group.
· Amendment to IFRS 9 -'Financial
instruments', on general hedge accounting. The IASB has amended
IFRS 9 to align hedge accounting more closely with an entity’s risk
management. The revised standard also establishes a more
principles-based approach to hedge accounting and addresses
inconsistencies and weaknesses in the current model in IAS 39. The
transitional provisions described above are likely to change once
the IASB completes all phases of IFRS 9. Effective 1 January 2018. The amendment is not expected to
have a significant impact on the Group.
· IFRS 16 – ‘Leases’. IFRS 16 supersedes IAS
17, ‘Leases’, IFRIC 4, ‘Determining whether an Arrangement contains
a Lease’, SIC 15, ‘Operating Leases – Incentives’ and SIC 27,
‘Evaluating the Substance of Transactions Involving the Legal Form
of a Lease’. Effective 1 January
2019. The standard is not expected to have a significant
impact on the Group.
4. Segment
Reporting
The Group has only one primary product produced in a single
geographic location, being gold produced in Tanzania. In addition the Group produces
copper and silver as a co-product. Reportable operating segments
are based on the internal reports provided to the Chief Operating
Decision Maker (“CODM”) to evaluate segment performance, decide how
to allocate resources and make other operating decisions. After
applying the aggregation criteria and quantitative thresholds
contained in IFRS 8, the Group’s reportable operating segments were
determined to be: North Mara gold mine; Bulyanhulu gold mine;
Buzwagi gold mine; a separate Corporate and Exploration segment,
which primarily consist of costs related to other charges and
corporate social responsibility expenses.
Segment results and carrying values include items directly
attributable to the segment as well as those that can be allocated
on a reasonable basis. Segment carrying values are disclosed and
calculated as shareholders equity after adding back debt and
intercompany liabilities, and subtracting cash and intercompany
assets. Capital expenditures comprise of additions to property,
plant and equipment. The Group has also included segment cash costs
and all-in sustaining cost per ounce sold.
Segment information for the reportable operating segments of the
Group for the periods ended 31 December
2016 and 31 December 2015 is
set out below.
|
For the year ended 31 December 2016 |
(Unaudited)
(in thousands of United States dollars) |
North
Mara |
Bulyanhulu |
Buzwagi |
Other |
Total |
Gold revenue |
468,340 |
345,481 |
200,648 |
- |
1,014,469 |
Co-product
revenue |
953 |
15,447 |
22,663 |
- |
39,063 |
Total segment
revenue |
469,293 |
360,928 |
223,311 |
- |
1,053,532 |
Segment cash operating
cost1 |
(155,344) |
(217,226) |
(188,896) |
- |
(561,466) |
Realised losses on
gold hedges |
- |
- |
(1,818) |
- |
(1,818) |
Corporate
administration |
(7,954) |
(5,975) |
(4,176) |
(3,790) |
(21,895) |
Share-based
payments |
(623) |
(518) |
(470) |
(28,318) |
(29,929) |
Exploration and
evaluation costs |
(297) |
(3,532) |
- |
(20,191) |
(24,020) |
Other charges and
corporate social responsibility expenses |
(2,295) |
(3,442) |
(723) |
7,444 |
984 |
EBITDA2 |
302,780 |
130,235 |
27,228 |
(44,855) |
415,388 |
Impairment
charges |
- |
- |
- |
- |
- |
Depreciation and
amortisation4 |
(67,472) |
(82,022) |
(12,668) |
(1,634) |
(163,796) |
EBIT2 |
235,308 |
48,213 |
14,560 |
(46,489) |
251,592 |
Finance income |
|
|
|
|
1,512 |
Finance expense |
|
|
|
|
(11,047) |
Profit before
taxation |
|
|
|
|
242,057 |
Tax expense |
|
|
|
|
(147,113) |
Net profit for the
period |
|
|
|
|
94,944 |
|
|
|
|
|
|
Capital
expenditure: |
|
|
|
|
|
Sustaining |
23,558 |
20,231 |
3,582 |
1,416 |
48,787 |
Expansionary |
2,399 |
1,262 |
- |
- |
3,661 |
Capitalised
development |
75,609 |
63,082 |
- |
- |
138,691 |
|
101,566 |
84,575 |
3,582 |
1,416 |
191,139 |
Non-cash capital expenditure adjustments |
|
|
|
|
Reclamation asset
addition |
6,703 |
10,728 |
4,524 |
- |
21,955 |
Total capital
expenditure |
108,269 |
95,303 |
8,106 |
1,416 |
213,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental cash
operating cost |
155,344 |
217,226 |
188,896 |
|
561,466 |
Deduct: co-product
revenue |
(953) |
(15,447) |
(22,663) |
|
(39,063) |
Total cash costs |
154,391 |
201,779 |
166,233 |
|
522,403 |
Sold ounces |
376,255 |
279,286 |
161,202 |
|
816,743 |
Cash cost per ounce
sold2 |
410 |
722 |
1,031 |
|
640 |
Corporate
administration charges |
21 |
21 |
26 |
|
27 |
Share based
payments |
2 |
2 |
3 |
|
37 |
Rehabilitation -
accretion and depreciation |
9 |
7 |
3 |
|
7 |
Corporate social
responsibility expenses |
15 |
6 |
10 |
|
13 |
Capitalised stripping/
UG development |
201 |
226 |
- |
|
170 |
Sustaining capital
expenditure |
75 |
74 |
22 |
|
64 |
All-in sustaining
cost per ounce sold2 |
733 |
1,058 |
1,095 |
|
958 |
|
|
|
|
|
|
Segment carrying
value3 |
246,175 |
1,231,793 |
97,243 |
82,710 |
1,657,921 |
|
For the year ended 31 December 2015 |
(Audited)
(US$’000,except per ounce amounts) |
North
Mara |
Bulyanhulu |
Buzwagi |
Other |
Total |
|
Gold revenue |
335,144 |
304,559 |
192,759 |
- |
832,462 |
|
Co-product
revenue |
563 |
14,556 |
20,550 |
- |
35,669 |
|
Total segment
revenue |
335,707 |
319,115 |
213,309 |
- |
868,131 |
|
Segment cash operating
cost1 |
(171,133) |
(226,129) |
(195,208) |
- |
(592,470) |
|
Corporate
administration |
(13,897) |
(11,107) |
(8,424) |
(1,027) |
(34,455) |
|
Share-based
payments |
(31) |
(597) |
54 |
(4,963) |
(5,537) |
|
Exploration and
evaluation costs |
(389) |
(4,354) |
(64) |
(14,930) |
19,737) |
|
Other charges and
corporate social responsibility expenses |
(15,629) |
(17,796) |
(8,193) |
657 |
(40,961) |
|
EBITDA2 |
134,628 |
59,132 |
1,474 |
(20,263) |
174,971 |
|
Impairment
charges |
- |
- |
(146,201) |
- |
(146,201) |
|
Depreciation and
amortisation4 |
(67,459) |
(52,589) |
(19,246) |
(2,403) |
(141,697) |
|
EBIT2 |
67,169 |
6,543 |
(163,973) |
(22,666) |
(112,927) |
|
Finance income |
|
|
|
|
1,384 |
|
Finance expense |
|
|
|
|
(12,617) |
|
Loss before
taxation |
|
|
|
|
(124,160) |
|
Tax expense |
|
|
|
|
(72,988) |
|
Net loss for the
year |
|
|
|
|
(197,148) |
|
|
|
|
|
|
|
|
Capital
expenditure: |
|
|
|
|
|
|
Sustaining |
13,229 |
42,419 |
10,855 |
974 |
67,477 |
|
Expansionary |
962 |
(957) |
- |
- |
5 |
|
Capitalised
development |
48,376 |
59,830 |
1,480 |
- |
109,686 |
|
|
62,567 |
101,292 |
12,335 |
974 |
177,168 |
|
Non-cash capital
expenditure adjustments |
|
|
|
|
|
|
Reclamation asset
reduction |
(18,909) |
(5,664) |
(7,363) |
- |
(31,936) |
|
Total capital
expenditure |
43,658 |
95,628 |
4,972 |
974 |
145,232 |
|
|
|
|
|
|
|
|
Segmental cash
operating cost |
171,133 |
226,129 |
195,208 |
|
592,470 |
|
Deduct: co-product
revenue |
(563) |
(14,556) |
(20,550) |
|
(35,669) |
|
Total cash costs |
170,570 |
211,573 |
174,658 |
|
556,801 |
|
Sold ounces |
288,905 |
265,341 |
166,957 |
|
721,203 |
|
Cash cost per ounce
sold2 |
590 |
797 |
1,046 |
|
772 |
|
Corporate
administration charges |
48 |
52 |
50 |
|
48 |
|
Share-based
payments |
- |
2 |
- |
|
8 |
|
Rehabilitation -
accretion and depreciation |
22 |
6 |
6 |
|
12 |
|
Corporate social
responsibility expenses |
19 |
11 |
11 |
|
18 |
|
Capitalised stripping/
UG development |
167 |
225 |
9 |
|
152 |
|
Sustaining capital
expenditure |
69 |
160 |
65 |
|
102 |
|
All-in sustaining
cost per ounce sold2 |
915 |
1,253 |
1,187 |
|
1,112 |
|
|
|
|
|
|
|
|
Segment carrying
value3 |
284,876 |
1,257,299 |
80,654 |
72,851 |
1,695,680 |
|
1 The CODM reviews cash operating costs for the three
operating mine sites separately from corporate administration costs
and exploration costs. Consequently, the Group has reported these
costs in this manner.
2 These are non-IFRS financial performance measures with no
standard meaning under IFRS. Refer to ‘Non IFRS measures’ on page
26 for definitions.
3 Segment carrying values are calculated as shareholders
equity after adding back debt and intercompany liabilities, and
subtracting cash and intercompany assets and include outside
shareholders’ interests.
4 Depreciation and amortisation include the depreciation
component of the cost of inventory sold.
5. Revenue
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Gold doré sales |
739,317 |
567,478 |
Gold concentrate
sales¹ |
275,152 |
264,984 |
Copper concentrate
sales¹ |
32,658 |
31,028 |
Silver sales |
6,405 |
4,641 |
Total |
1,053,532 |
868,131 |
1 Concentrate sales includes negative
provisional price adjustments to the accounts receivable balance
due to changes in market gold, silver and copper prices prior to
final settlement as follows: US$7.0
million for the year ended 31
December 2016 (US$4.0 million
for the year ended 31 December
2015).
(in thousands of
United States dollars) |
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
Revenue by Location
of Customer2 |
2016 |
2015 |
Europe |
|
|
Switzerland |
488,383 |
30,676 |
Germany |
58,747 |
78,553 |
Belgium |
- |
486 |
Asia |
|
|
India |
253,881 |
538,543 |
China |
176,143 |
136,439 |
Japan |
76,378 |
83,434 |
Total
revenue |
1,053,532 |
868,131 |
2
Revenue by location of customer is determined based on the country
to which the gold is delivered.
Included in revenues for the year ended 31 December 2016 are sales to six major
customers. Revenues of approximately US$913
million (2015: US$604 million)
arose from sales to four of the Group’s largest customers.
6. Exploration
and Evaluation costs
The following represents a summary of exploration and evaluation
expenditures incurred at each mine site and significant exploration
targets (if applicable).
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Expensed during the
year: |
|
|
North Mara |
297 |
389 |
Buzwagi |
- |
64 |
Bulyanhulu |
3,532 |
4,354 |
Kenya |
10,582 |
8,248 |
West Africa |
7,544 |
4,780 |
Other1 |
2,065 |
1,902 |
Total expensed |
24,020 |
19,737 |
Capitalised during the
year: |
|
|
North Mara |
2,399 |
962 |
Total |
26,419 |
20,699 |
1 - Included in “other” are the exploration activities
conducted through ABG Exploration Limited. All primary greenfield
exploration and evaluation activities are conducted in this
company.
7. Impairment
In accordance with IAS 36 “Impairment of assets” and IAS 38
“Intangible Assets” a review for impairment of goodwill is
undertaken annually, or at any time an indicator of impairment is
considered to exist, and in accordance with IAS 16 “Property, plant
and equipment” a review for impairment of long-lived assets is
undertaken at any time an indicator of impairment is considered to
exist.
During 2015, the prevailing gold price fell significantly which
forced a review of the gold price outlook used for long-term
planning and reserve estimation. As reported in the consolidated
financial statements for the year ended 31
December 2015, on a gross basis, and before taking into
account the impact of deferred tax, the total impairment charge
booked in 2015 amounted to US$146.2
million at Buzwagi. At Bulyanhulu and North Mara, the
impairment review did not indicate a need for impairment because
the recoverable amount was calculated as higher than the carrying
values.
During 2016, the annual review for impairment of goodwill and
indefinite life assets was performed. The review compared the
recoverable amount of assets for the cash generating units (“CGU”)
to the carrying value of the CGU’s including goodwill. The
recoverable amount of an asset is assessed by reference to the
higher of value in use (“VIU”), being the net present value (“NPV”)
of future cash flows expected to be generated by the asset, and
fair value less costs to dispose (“FVLCD”). The FVLCD of a CGU is
based on an estimate of the amount that the Group may obtain in a
sale transaction on an arm’s length basis. There is no active
market for the Group’s CGU’s. 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, assume limited resource conversion, 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 key economic assumptions used in the reviews during 2016 and
2015 were:
|
For
the year ended
31 December |
For
the year ended
31 December |
|
2016 |
2015 |
Gold price per ounce
(2016) |
- |
US$1,100 |
Gold price per ounce
(2017) |
US$1,200 |
US$1,150; US$1,100 (Buzwagi) |
Gold price per
ounce(Long term) |
US$1,200 |
US$1,200; US$1,100 (Buzwagi) |
Copper price per
pound |
US$2.25 |
US$2.00
(2016); US$2.25 (2017); US$2.50 (2018+) |
South African Rand
(US$:ZAR) |
14 |
12.5 |
Tanzanian Shilling
(US$:TZS) |
2,150 |
2,100 |
Long-term oil price
per barrel |
US$60 |
US$50
(2016); US$65 (2017); US$75 (2018+) |
Discount rate |
5% |
5% |
NPV multiples |
1 |
1 |
For purposes of testing for impairment of long-lived assets, we
have assessed whether a reasonably possible change in any of the
key assumptions used to estimate the recoverable value for CGUs
would result in an impairment charge.
Management’s view is that the recoverable values are most
sensitive to changes in the assumptions around gold prices and
discount rates. As a result, sensitivity calculations were
performed for these for each of the CGUs. The sensitivity analysis
is based on a decrease in the long term gold price of US$100 per ounce, and an increase in the discount
rate of 1%.
Neither of the reasonably possible changes set out above would
result in an impairment. This sensitivity analysis also does not
take into account any of management’s mitigation factors should
these changes occur.
8. Other
(Income)/ Charges
|
For
the year ended
31 December |
For the year ended
31 December |
|
(Unaudited) |
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Other
expenses |
|
|
Restructuring
costs |
7,689 |
9,864 |
Foreign exchange
losses |
- |
23,130 |
Disallowed
indirect taxes |
1,447 |
1,846 |
Legal costs |
2,641 |
2,502 |
One off legal
settlement |
- |
7,300 |
Government
levies and charges |
- |
256 |
Project
development costs |
1,123 |
233 |
Other |
3,136 |
3,299 |
Total |
16,036 |
48,430 |
|
|
|
Other
income |
|
|
Bad debts
recovered |
(54) |
(465) |
Discounting of
indirect tax receivables |
(9,719) |
(5,906) |
Profit on
disposal of property, plant and equipment |
(289) |
(1,315) |
Unrealised
non-hedge derivative gains |
(13,031) |
(2,293) |
Foreign exchange
gains |
(1,137) |
- |
Insurance
proceeds |
(3,455) |
- |
De-recognition
of finance lease liabilities |
- |
(3,918) |
De-recognition
of deferred consideration |
- |
(5,313) |
Proceeds from
earn-in agreement |
- |
(1,000) |
Other |
- |
(141) |
Total |
(27,685) |
(20,351) |
|
|
|
Total other
(income)/charges |
(11,649) |
28,079 |
|
|
|
|
9. Finance
Income and Expenses
a) Finance
income
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Interest on time
deposits |
1,236 |
910 |
Other |
276 |
474 |
Total |
1,512 |
1,384 |
b) Finance
expense
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Unwinding of
discount1 |
2,254 |
3,651 |
Revolving credit
facility charges2 |
2,279 |
2,192 |
Interest on CIL
facility |
3,956 |
5,106 |
Interest on finance
leases |
- |
408 |
Bank charges |
701 |
516 |
Other |
1,857 |
744 |
Total |
11,047 |
12,617 |
1 The
unwinding of discount is calculated on the environmental
rehabilitation provision.
2
Included in credit facility charges are the amortisation of the
fees related to the revolving credit facility as well as the
monthly interest and facility fees.
10. Tax Expense
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Current tax: |
|
|
Current tax on profits
for the year |
54,508 |
- |
Adjustments in respect
of prior years1 |
36,697 |
- |
Total current
tax |
91,205 |
- |
Deferred tax: |
|
|
Origination and
reversal of temporary differences2 |
55,908 |
72,988 |
Total deferred
tax |
55,908 |
72,988 |
Income tax
expense |
147,113 |
72,988 |
1 Included in this amount is a provision for uncertain tax
positions of US$32.3 million relating
to North Mara, and US$4.4 million
relating to Tulawaka, following an adverse tax ruling as reported
in Q1 2016.
2 Included in this amount is a provision for uncertain tax
positions of US$35.0 million relating
to Bulyanhulu following an adverse tax ruling, as reported in Q1
2016.
The tax on the Group’s profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to the profits of the consolidated entities as
follows:
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
(Loss)/ profit
before tax |
242,057 |
(124,160) |
Tax calculated at
domestic tax rates applicable to profits in the respective
countries |
73,373 |
(35,932) |
Tax effects of: |
|
|
Expenses not
deductible for tax purposes |
247 |
676 |
Tax losses for which
no deferred income tax asset was recognised3 |
76,592 |
88,702 |
Adjustments to
unrecognised tax benefits carried forward4 |
- |
12,740 |
Prior year
adjustments |
(3,099) |
6,802 |
Tax charge |
147,113 |
72,988 |
3 Included in 2015 is the tax impact of US$42.5 million of deferred tax assets
derecognised at Buzwagi following the impairment review.
4 The 2015 reconciliation includes an amount of
US$12.7 million relating to an
increase in the amount of unrecognised tax benefits carried
forward. The adjustment reflects uncertainty regarding
recoverability of certain tax losses, and gives rise to an
increased deferred tax charge.
Tax periods remain open to review by the Tanzanian Revenue
Authority (TRA) in respect of income taxes for five years following
the date of the filing of the corporate tax return, during which
time the authorities have the right to raise additional tax
assessments including penalties and interest. Under certain
circumstances the reviews may cover longer periods. Because a
number of tax periods remain open to review by tax authorities,
there is a risk that transactions that have not been challenged in
the past by the authorities may be challenged by them in the
future, and this may result in the raising of additional tax
assessments plus penalties and interest.
11. Earnings /(Loss) Per Share
(EPS)
Basic EPS is calculated by dividing the net profit/(loss) for
the year attributable to owners of the Company by the weighted
average number of Ordinary Shares in issue during the year.
Diluted earnings per share is calculated by adjusting the
weighted average number of Ordinary Shares outstanding to assume
conversion of all dilutive potential Ordinary Shares. The Company
has dilutive potential Ordinary Shares in the form of stock
options. The weighted average number of shares is adjusted for the
number of shares granted assuming the exercise of stock
options.
At 31 December 2016 and
31 December 2015, earnings per share
have been calculated as follows:
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Earnings/(Loss) |
|
|
Net profit/(loss) from
continuing operations attributable to owners of the parent |
94,944 |
(197,148) |
|
|
|
Weighted average
number of Ordinary Shares in issue |
410,085,499 |
410,085,499 |
Adjusted for dilutive
effect of stock options |
355,514 |
258,139 |
Weighted average
number of Ordinary Shares for diluted earnings per share |
410,441,013 |
410,343,638 |
|
|
|
Earnings/(Loss) per
share |
|
|
Basic earnings/(loss)
per share (cents) |
23.2 |
(48.1) |
Dilutive
earnings/(loss) per share (cents) |
23.1 |
(48.1) |
12. Cash flow – other items
a) Operating cash flows - other
items
Movements relating to working capital items
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Indirect and corporate
taxes1 |
(59,100) |
(24,177) |
Increase in
current indirect tax receivable |
(18,224) |
(24,177) |
Prepaid
corporate tax |
(20,000) |
- |
Income tax
paid |
(20,876) |
- |
Other current
assets |
695 |
8,152 |
Trade receivables |
(4,472) |
20,626 |
Inventories2 |
(8,312) |
(28,106) |
Other
liabilities3 |
33,582 |
6,102 |
Share based
payments3 |
(35,966) |
(1,803) |
Trade and other
payables4 |
15,931 |
8,448 |
Other working capital
items5 |
(855) |
5,984 |
Total |
(58,497) |
(4,774) |
1 During the year, we have made US$20.0 million corporate tax prepayments in line
with the MoU entered into with the Tanzanian Government in Q1 2016.
This has been funded through an offset against current indirect
taxes that was due for refund. In addition, we have paid
provisional corporate taxes in relation to North Mara of
US$20.9 million, which was paid
through offset against indirect tax receivables agreed under the
MOS entered into in 2012. VAT refunds received in 2016 amounted to
US$63 million (2015: US$86 million).
2 The inventory adjustment includes the movement in current
as well as the non-current portion of inventory and has been
adjusted for the non-cash impairment impact of 2015.
3 The other liabilities adjustment mainly relate to the
revaluation of future shared based payments. During the year, share
based payments of US$36.0 million was
made.
4 The trade and other payables adjustment exclude statutory
liabilities in the form of income tax payable.
5 Other working capital items include exchange losses
associated with working capital.
Other non-cash items
|
For
the year
ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Adjustments for
non-cash income statement items: |
|
|
Foreign exchange
(gains)/losses |
(1,463) |
19,789 |
Discounting of
indirect tax receivables |
(9,719) |
(5,906) |
Provisions
settled |
(8) |
(2,445) |
Unrealised gain on
derivatives |
(13,031) |
(2,293) |
Stock option
expense |
77 |
182 |
De-recognition of
deferred consideration |
- |
(5,313) |
Other non-cash
items |
36 |
(3,858) |
Exchange loss on
revaluation of cash balances |
258 |
3,341 |
Total |
(23,850) |
3,497 |
b) Investing cash flows - other
items
|
For
the year ended
31 December
(Unaudited) |
For
the year ended
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Proceeds on sale of
property, plant and equipment |
6,713 |
3,662 |
Other long-term
receivables |
(10) |
151 |
Rehabilitation
expenditure |
(175) |
(557) |
Total |
6,528 |
3,256 |
13. Property, Plant and
Equipment
For the year ended
31 December 2016 (Unaudited)
(in thousands of United States dollars) |
Plant and equipment |
Mineral properties and mine development costs |
Assets under construction¹ |
Total |
At 1 January 2016, net
of accumulated depreciation |
572,877 |
761,592 |
56,244 |
1,390,713 |
Additions |
- |
- |
191,139 |
191,139 |
Non-cash reclamation
asset adjustment |
- |
- |
21,955 |
21,955 |
Foreign currency
translation adjustments |
2,203 |
- |
- |
2,203 |
Disposals/write-downs |
(6,533) |
- |
- |
(6,533) |
Depreciation |
(95,864) |
(60,437) |
- |
(156,301) |
Transfers between
categories |
81,310 |
140,864 |
(222,174) |
- |
At 31 December
2016 |
553,993 |
842,019 |
47,164 |
1,443,176 |
|
|
|
|
|
At 1 January 2016 |
|
|
|
|
Cost |
1,845,234 |
1,636,413 |
56,244 |
3,537,891 |
Accumulated
depreciation |
(1,272,357) |
(874,821) |
- |
(2,147,178) |
Net carrying
amount |
572,877 |
761,592 |
56,244 |
1,390,713 |
|
|
|
|
|
At 31 December
2016 |
|
|
|
|
Cost |
1,914,522 |
1,777,277 |
47,164 |
3,738,963 |
Accumulated
depreciation and impairment |
(1,360,529) |
(935,258) |
- |
(2,295,787) |
Net carrying
amount |
553,993 |
842,019 |
47,164 |
1,443,176 |
1 Assets under construction represents (a) sustaining
capital expenditures incurred constructing property, plant and
equipment related to operating mines and advance deposits made
towards the purchase of property, plant and equipment; and (b)
expansionary expenditure allocated to a project on a business
combination or asset acquisition, and the subsequent costs incurred
to develop the mine. Once these assets are ready for their intended
use, the balance is transferred to plant and equipment and/or
mineral properties and mine development costs.
For the year ended
31 December 2015 (Audited)
(in thousands of United States dollars) |
Plant and equipment |
Mineral properties and mine development costs |
Assets under construction¹ |
Total |
At 1 January 2015, net
of accumulated depreciation |
570,569 |
710,812 |
143,934 |
1,425,315 |
Additions |
- |
- |
177,168 |
177,168 |
Non-cash reclamation
asset adjustment |
- |
- |
(31,936) |
(31,936) |
Foreign currency
translation adjustments |
(4,149) |
- |
- |
(4,149) |
Disposals/write-downs |
(4,820) |
- |
- |
(4,820) |
Impairments2 |
(18,571) |
(18,929) |
- |
(37,500) |
Depreciation |
(78,105) |
(55,260) |
- |
(133,365) |
Transfers between
categories |
107,953 |
124,969 |
(232,922) |
- |
At 31 December
2015 |
572,877 |
761,592 |
56,244 |
1,390,713 |
|
|
|
|
|
At 1 January 2015 |
|
|
|
|
Cost |
1,750,743 |
1,511,444 |
143,934 |
3,406,121 |
Accumulated
depreciation |
(1,180,174) |
(800,632) |
- |
(1,980,806) |
Net carrying
amount |
570,569 |
710,812 |
143,934 |
1,425,315 |
|
|
|
|
|
At 31 December
2015 |
|
|
|
|
Cost |
1,845,234 |
1,636,413 |
56,244 |
3,537,891 |
Accumulated
depreciation and impairment |
(1,272,357) |
(874,821) |
- |
(2,147,178) |
Net carrying
amount |
572,877 |
761,592 |
56,244 |
1,390,713 |
1 Assets under construction represents (a) sustaining
capital expenditures incurred constructing property, plant and
equipment related to operating mines and advance deposits made
towards the purchase of property, plant and equipment; and (b)
expansionary expenditure allocated to a project on a business
combination or asset acquisition, and the subsequent costs incurred
to develop the mine. Once these assets are ready for their intended
use, the balance is transferred to plant and equipment and/or
mineral properties and mine development costs.
2 The impairment in 2015 relates to property, plant and
equipment at Buzwagi. Refer to note 7 for further
details.
Leases
Property, plant and equipment include assets relating to the
design and construction costs of power transmission lines and
related infrastructure. At completion, ownership was transferred to
TANESCO in exchange for amortised repayment in the form of reduced
electricity supply charges. No future lease payment obligations are
payable under these finance leases.
Property, plant and equipment also include five drill rigs
purchased under short-term finance leases.
The following amounts were included in property, plant and
equipment where the Group was a lessee under a finance lease:
|
|
|
As
at
31 December |
As
at
31 December |
(in
thousands of United States dollars) |
|
2016
(Unaudited) |
2015
(Audited) |
Cost -
capitalised finance leases |
|
|
51,617 |
51,617 |
Accumulated
depreciation and impairment |
|
|
(40,925) |
(37,952) |
Net carrying
amount |
|
|
10,692 |
13,665 |
14. Deferred Tax Assets and
Liabilities
Unrecognised
deferred tax assets
Deferred tax assets have not been recognised in respect of the
following items:
|
As
at
31 December |
As
at
31 December |
(in thousands of
United States dollars) |
(Unaudited)
2016 |
(Audited)
2015 |
Tax losses |
648,984 |
520,591 |
Total |
648,984 |
520,591 |
The above tax losses, which translate into deferred tax assets
of approximately US$184 million
(2015: US$149 million), have not been
recognised in respect of these items due to uncertainties regarding
availability of tax losses, or there being uncertainty regarding
future taxable income against which these assets can be
utilised.
Recognised
deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the
following:
Balance sheet classifications
Balance sheet
classification |
Assets |
Liabilities |
Net |
(in thousands of
United States dollars) |
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
Property, plant and
equipment1 |
- |
- |
390,050 |
380,264 |
390,050 |
380,264 |
Provisions |
(4,456) |
(5,144) |
- |
- |
(4,456) |
(5,144) |
Interest
deferrals |
(479) |
(63) |
- |
522 |
(479) |
459 |
Tusker
acquisition |
- |
- |
6,354 |
6,478 |
6,354 |
6,478 |
Tax loss
carry-forwards |
(251,510) |
(298,017) |
- |
- |
(251,510) |
(298,017) |
Net deferred tax
(assets)/liabilities |
(256,445) |
(303,224) |
396,404 |
387,264 |
139,959 |
84,040 |
Legal entities
Legal
entities |
Assets |
Liabilities |
Net |
(in thousands of
United States dollars) |
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
North Mara Gold Mine
Ltd1 |
- |
- |
77,529 |
69,662 |
77,529 |
69,662 |
Bulyanhulu Gold Mine
Ltd |
- |
- |
64,539 |
19,528 |
64,539 |
19,528 |
Pangea Minerals
Ltd1 |
(7,504) |
(11,447) |
- |
- |
(7,504) |
(11,447) |
Other |
(927) |
(181) |
6,322 |
6,478 |
5,395 |
6,297 |
Net deferred tax
(assets)/liabilities |
(8,431) |
(11,628) |
148,390 |
95,668 |
139,959 |
84,040 |
Uncertainties regarding availability of tax losses in respect of
enquiries raised and additional tax assessments issued by the TRA,
have been measured using the single best estimate of likely outcome
approach resulting in the recognition of substantially all the
related deferred tax assets and liabilities. Alternative acceptable
measurement policies (e.g. on a weighted average expected outcome
basis) could result in a change to deferred tax assets and
liabilities being recognised, and the deferred tax charge in the
income statement.
No deferred tax has been recognised in respect of temporary
differences associated with investments in subsidiaries where the
Group is in a position to control the timing of the reversal of the
temporary differences, and it is probable that such differences
will not reverse in the foreseeable future. The aggregate amount of
temporary differences associated with such investments in
subsidiaries is represented by the contribution of those
investments to the Group’s retained earnings and amounted to
US$411 million (2015: US$391 million).
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
31 December 2016 and 31 December 2015.
|
Assets |
Liabilities |
|
For the year ended
31 December 2016
(in thousands of United States dollars) |
Current |
Non-current |
Current |
Non-current |
Net
fair value |
Interest contracts:
Designated as cash flow hedges |
33 |
255 |
73 |
- |
215 |
Commodity contracts:
Not designated as hedges |
1,310 |
566 |
511 |
30 |
1,335 |
Total |
1,343 |
821 |
584 |
30 |
1,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
Liabilities |
|
For the year ended
31 December 2015
(in thousands of United States dollars) |
Current |
Non-current |
Current |
Non-current |
Net
fair value |
Interest contracts:
Designated as cash flow hedges |
- |
849 |
490 |
- |
359 |
Commodity contracts:
Not designated as hedges |
- |
- |
10,430 |
1,560 |
(11,990) |
Total |
- |
849 |
10,920 |
1,560 |
(11,631) |
16. Other Assets
|
As
at
31 December
(Unaudited) |
As
at
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Amounts due from
government1 |
11,748 |
12,078 |
Operating lease
prepayments - TANESCO powerlines |
809 |
1,261 |
Prepayments -
Acquisition of rights over leasehold land2 |
42,250 |
48,419 |
Non-current portion of
indirect tax receivable3 |
7,945 |
52,671 |
Village housing |
254 |
253 |
Deferred finance
charges |
291 |
282 |
Total |
63,297 |
114,964 |
1 Included in this amount are amounts receivable from the
Tanzanian Social Security Fund of US$5.4
million (2015: US$5.3 million)
as well as amounts due from TANESCO of US$3.1 million (2015: US$2.7 million).
2 Prepayments made to the landowners in respect of
acquisition of the rights over the use of leasehold land.
3 The non-current portion of indirect tax receivables was
subject to discounting to its current value using a discount rate
of 5% (2015: 5%). This resulted in a discounting credit of
US$9.7 million (2015: US$5.9 million) to the income statement (refer
note 8).
17. Trade Receivables and Other
Current Assets
|
As
at
31 December
(Unaudited) |
As
at
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Trade and other
receivables: |
|
|
Amounts due from doré
and concentrate sales |
7,841 |
5,435 |
Other
receivables¹ |
12,023 |
9,940 |
Due from related
parties |
40 |
116 |
Less: Provision for
doubtful debt on other receivables |
(1,074) |
(1,128) |
Total |
18,830 |
14,363 |
1 Other receivables relates to employee and supplier back
charge-related receivables and refundable deposits.
Trade receivables other than concentrate receivables are
non-interest bearing and are generally on 30-90 day terms.
Concentrate receivables are generally on 60-120 day terms depending
on the terms per contract. Trade receivables are amounts due from
customers in the ordinary course of business. If collection is
expected in one year or less, they are classified as current
assets; if not, they are presented as non-current assets. The
carrying value of trade receivables recorded in the financial
statements represents the maximum exposure to credit risk. The
Group does not hold any collateral as security.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less any provisions for impairment. A provision
for impairment of trade receivables is established when there is
objective evidence that the Group will not be able to collect all
amounts due according to the original terms of the receivables.
|
As
at
31 December
(Unaudited) |
As
at
31 December
(Audited) |
(in thousands of
United States dollars) |
2016 |
2015 |
Other current
assets: |
|
|
Current portion of
indirect tax receivables² |
128,423 |
57,557 |
Other receivables and
advance payments³ |
21,095 |
21,006 |
Total |
149,518 |
78,563 |
2 The current portion of indirect tax
receivables includes an amount of US$32.9
million which was transferred from non-current indirect tax
receivables as it is expected that the current portion will be
recovered within the next year.
3 Other receivables and advance payments relate to
prepayments for insurance and income taxes offset against
outstanding refunds for VAT and fuel levies and current amounts
receivable from the NSSF of US$5.0
million (2015: US$5.1
million).
18. Borrowings
During 2013, a US$142 million
facility was put in place to fund the bulk of the costs of the
construction of one of Acacia’s key growth projects, the Bulyanhulu
CIL Expansion project (“Project”). The Facility is collateralised
by the Project, has a term of seven years with a spread over Libor
of 250 basis points. The interest rate has been fixed at 3.6%
through the use of an interest rate swap. The seven year Facility
is repayable in equal bi-annual instalments over the term of the
Facility, after a two year repayment holiday period. The full
facility of US$142 million was drawn
at the end of 2013. The first principal payment of US$14.2 million was paid in H2 2015 and during
2016 two payments of US$14.2 million
were paid. As at 31 December 2016 the
balance owing was US$99.4 million
(2015: US$127.8 million). Interest
accrued to the value of US$0.6
million (2015: US$0.7 million)
was included in accounts payable at year end. Interest incurred on
the borrowings as well as hedging losses on the interest rate swap
for the year ended 31 December 2016
was US$4.0 million (2015:
US$5.1 million).
19. Provisions
|
Rehabilitation¹ |
Other² |
Total |
(in thousands of
United States dollars) |
2016 |
2015 |
2016 |
2015 |
2016 |
2015 |
At 1 January |
128,170 |
157,012 |
761 |
3,206 |
128,931 |
160,218 |
Change in
estimate³ |
21,956 |
(31,936) |
- |
- |
21,956 |
(31,936) |
Utilised during the
year |
(175) |
(557) |
(9) |
(2,445) |
(184) |
(3,002) |
Unwinding of
discount |
2,254 |
3,651 |
- |
- |
2,254 |
3,651 |
At 31
December |
152,205 |
128,170 |
752 |
761 |
152,957 |
128,931 |
Current portion |
(6,483) |
(816) |
(752) |
(761) |
(7,235) |
(1,577) |
Non-current
portion |
145,722 |
127,354 |
- |
- |
145,722 |
127,354 |
1 Rehabilitation provisions relate to the decommissioning costs
expected to be incurred for the operating mines. This expenditure
arises at different times over the LOM for the different mine sites
and is expected to be utilised in terms of cash outflows between
years 2017 and 2054 and beyond, varying from mine site to mine
site. The change in estimate in the current year relates mainly to
an update in estimate around closure related retrenchment costs,
and a reduction in the US risk free rates driven a change in
discount rate.
2 Other provisions relate to provisions for legal and
tax-related liabilities where the outcome is not yet certain but it
is expected that it will lead to a probable outflow of economic
benefits in future.
3 Toward the end of 2015 reclamation guarantees for the mine
sites were discussed with the Ministry of Energy and Minerals
including the required rehabilitation activity. These discussions,
in conjunction with the annual review of closure estimates and
closure planning have resulted in a re-estimation of the basis and
assumptions for cost estimates and periods of closure needed.
Rehabilitation obligations arise from the acquisition,
development, construction and normal operation of mining property,
plant and equipment, due to government controls and regulations
that protect the environment on the closure and reclamation of
mining properties. The major parts of the carrying amount of the
obligation relate to tailings and waste rock dumps
closure/rehabilitation and surface contouring; demolition of
buildings/mine facilities; ongoing water treatment; and ongoing
care and maintenance of closed mines. The fair values of
rehabilitation provisions are measured by discounting the expected
cash flows using a discount factor that reflects the
credit-adjusted risk-free rate of interest. Acacia prepares
estimates of the timing and amount of expected cash flows when an
obligation is incurred and updates expected cash flows to reflect
changes in facts and circumstances. The principal factors that can
cause expected cash flows to change are: the construction of new
processing facilities; changes in the quantities of material in
reserves and a corresponding change in the LOM plan; changing ore
characteristics that impact required environmental protection
measures and related costs; changes in water quality that impact
the extent of water treatment required; and changes in laws and
regulations governing the protection of the environment.
Each year Acacia assesses cost estimates and other assumptions
used in the valuation of the rehabilitation provision at each
mineral property to reflect events, changes in circumstances and
new information available. Changes in these cost estimates and
assumptions are recorded as an adjustment to the carrying amount of
the corresponding asset. Rehabilitation provisions are adjusted to
reflect the passage of time (accretion) calculated by applying the
discount factor implicit in the initial fair-value measurement to
the beginning-of-period carrying amount of the provision.
Settlement gains/losses will be recorded in other
(income)/expense.
Other environmental remediation costs that are not
rehabilitation provisions are expensed as incurred.
20. Commitments and Contingencies
The Group is subject to various laws and regulations which, if
not observed, could give rise to penalties. As at 31 December 2016, the Group has the following
commitments and/or contingencies.
a) Legal contingencies
As at 31 December 2016, the Group
was a defendant in approximately 185 lawsuits. The plaintiffs are
claiming damages and interest thereon from various members of the
Group in connection with one or more of the following: land
compensation and resettlement, alleged breaches of contract for
various goods and services, employment and labour related matters,
historical exploration agreements with third parties.
The Group’s Legal Counsel is defending the Group’s current
position, and the outcome of the lawsuits cannot presently be
determined. Included in the total amounts claimed are the
following:
An adjudication claim for US$115
million by Bismark Hotel Limited relating to an alleged
breach of contract under an Optional Agreement signed in 1995. The
claim relates to an application for a prospecting licence with no
attributable reserves, resources or value. We are waiting for the
adjudicators to fix a hearing date. Management are of the opinion
that the claim is without merit and that it will be successfully
defended.
An arbitration award of US$ 4
million, relating to a historical arbitration between North
Mara Gold Mine Limited (NMGML) and Diamond Motors Limited (DML) in
respect of an alleged breach of contract claim in relation to the
interpretation of periodic rate review
requirements and other provisions of drilling
services contracts. NMGML counterclaimed against the amount and
raised a provision of US$6.2 million
reflecting the view of NMGML as to the proper interpretation and
application of the rate review clauses of the contracts. An
arbitral tribunal decided in favour of NMGML on the material
grounds of the claim on 10
August 2015, with an award of US$4 million for unpaid
rates to DML for the period up
to September 2013. The Tribunal found
that the subsequent period fell to be determined by negotiation of
the parties pursuant to the contractual terms and should be
calculated based on the tribunal’s judgment. After the Award was
issued, DML: (i) sought to challenge the Award in the Commercial
Court; and (ii) filed a winding up application against NMGML based
on unpaid rates for 2014 and 2015. NMGML petitioned the High Court
to stay the winding up petition, given that the underlying debt and
alleged indebtedness for 2014/2015 must be determined by
arbitration. The stay was rejected on the basis that winding up
procedures cannot be determined by arbitration. This decision is on
appeal. DML recently applied to strike out the appeal on the basis
that the record on appeal was not timely filed. We will be
opposing this application, which may not be heard by the Court of
Appeal for some months. We are currently assessing options
available to determine the amount payable to DML for 2014/2015 in
order to reach an agreement on this and to have all Court
proceedings set aside. The hearing for the application to
wind up North Mara has yet to be scheduled. Payment has been made
for the Arbitration award (US$4
million) and we continue to carry a provision of
US$2.2 million as provisioned for the
first arbitration.
Contractor claims relating to alleged compensation events under
the Bulyanhulu CIL plant construction contract, purporting to
relate to matters which provide grounds for additional amounts
payable for scope of work variations and/or extensions of time to
the agreed project execution timetable. The alleged contractor
claims relate to a wide range of subject matters including
logistics delays, procurement delays, additional works, rainfall
delays, price escalation, certain matters relating to taxation,
entitlement to contingency amounts and other retained monies. The
aggregate value of MDM claims is US$50,438,630.25 and ZAR
33,066,481.49. Bulyanhulu is of the opinion that the
majority of MDM’s claims are defendable. In turn, Bulyanhulu has
counterclaimed for payment of delay damages due to continuing
delays in execution of the project amounting to US$20,016,000 in aggregate, multiple
defects claims (as remedied and as to be remedied) relating to the
design and build of the CIL plant, amounting to US$14,565,228 in aggregate, an overall fit
for purpose claim as a result of various grounds of negligence in
the design and construction of the CIL plant amounting to
US$31,393,877.10 in aggregate and
additional transportation costs of US$1,539,795. No provision has been made however;
we carry an accrual of unpaid project amounts of approximately
US$6,000,000.
A contractual dispute between various Acacia operating companies
and Petrolube/ISA to the value of US$35.1
million. The Acacia entities terminated contractual supply
relationships for: (i) the provision of hoses, fittings and
assembly services to operating entities by ISA on Notice of
5 July 2016; and (ii) the provision
of lubricants and associated services by Petrolube to operating
entities on 5 July 2016, in each case
pursuant to the termination without cause provisions in the
agreement, and following retendering of relevant services and as a
result of various breaches of contract relating to the provisions
of Petrolube/ISA services (including issues relating to reliability
of prior supplies and quality of products) and various other
breaches of contract by Petrolube/ISA. Subsequent to the
commencement of contractual dispute proceedings Petrolube/ISA
commenced court proceedings to have the termination of the
agreements set aside and to recover various damages limbs,
including loss of profits, and other general damages
(US$ 56,080,878.46 – Petrolube
Claim and US$ 24,868,942.64 ISA
Claim). We have challenged all elements of the Court
proceedings and have also challenged jurisdiction of the Court,
given that the contracts require all disputes to be referred to
arbitration following principal to principal dispute discussions.
We have commenced arbitration proceedings in connection will all
elements of the disputes, as required by the applicable contractual
dispute processes.
A claim for compensation against NMGML in relation to the
destruction of an office building and stone crusher machine. The
damage to the property was caused by the Tanzanian Police Force.
The claim has been refilled in the High Court and awaits
scheduling. Management expects to
be able to defend
the claim successfully as the damage of the property
was caused by the Tanzanian Police Force; therefore no provision
has been made.
A claim for breach of contract against Bulyanhulu Gold Mine
Limited in relation to a new office building which Bulyanhulu had
contracted to rent. However, Bulyanhulu had withdrawn from the
contract as the owner was unable to honour the terms; and the
construction of the building in question was not completed.
Management expects to be able to defend the claim successfully as
the construction of the office building was never completed;
therefore no provision has been made.
b) Tax-related contingencies
The TRA has issued a number of tax assessments to the Group
related to past taxation years from 2002-onwards. The Group
believes that the majority of these assessments are incorrect and
has filed objections and appeals accordingly in an attempt to
resolve these matters by means of discussions with the TRA or
through the Tanzanian appeals process. These include the
following:
A TRA assessment of US$21.3
million in respect of Tusker Gold Limited. The tax
assessment is based on the sales price of the Nyanzaga property of
US$71 million multiplied by the tax
rate of 30%. Management is of the view that the assessment is
invalid due to the fact that the acquisition is for Tusker Gold
Limited, a company incorporated in Australia. The shareholding of the Tanzanian
related entities did not change and the Tusker Gold Limited group
structure remains the same as prior to the acquisition. The case
was decided in favour of Acacia however the TRA appealed that
decision. The tax tribunal upheld the decision in favour of Acacia
however the TRA has appealed to the Court of Appeal. We are
awaiting a hearing date to be set.
A TRA assessment to the value of US$41.3
million for withholding tax on certain historic offshore
dividend payments paid by Acacia Mining plc to its shareholders.
Acacia is appealing this assessment on the substantive grounds
that, as an English incorporated company, it is not resident in
Tanzania for taxation
purposes. The appeal is currently pending at the Court of
Appeal and the substantive grounds of appeal will be filed on
receipt of the record of appeal required from the lower
tribunals.
Further TRA assessments issued to Acacia Mining plc to the value
of US$500.7 million, based on an
allegation that Acacia is resident in Tanzania for corporate and dividend
withholding tax purposes. The corporate tax assessments have been
levied on certain Group net profits before tax. We are in the
process of appealing these assessments at the TRA Board level.
Acacia’s substantive grounds of appeal are, again, based on the
correct interpretation of Tanzanian permanent establishment
principles and law, relevant to a non-resident English incorporated
company.
In addition, in Q1 2016 we received a judgement from the Court
of Appeal regarding a long standing dispute over tax calculations
at Bulyanhulu from 2000-2006. The Court of Appeal was reviewing
seven issues initially raised by the TRA in 2012 regarding certain
historic tax loss carry forwards and ruled in favour of Bulyanhulu
by the Tax Appeals Board in 2013. The TRA appealed against this
ruling and in 2014 the Tax Tribunal reversed the decision for all
seven issues. Acacia appealed against this judgement and in
March 2016 the Court of Appeal found
in favour of the TRA in five of the seven issues. The legal route
in Tanzania has now been
exhausted; however we are considering our options for the next
steps. The Court of Appeal ruling does not have a short term cash
flow impact but means that Bulyanhulu will be in a tax payable
situation approximately one year earlier than previously expected.
Acacia is yet to receive a revised tax assessment following
the judgement, but has raised further tax provisions of
US$69.9 million in order to address
the direct impact of the ruling on Bulyanhulu’s tax loss carry
forwards and the potential impact this may have on the
applicability of certain capital deductions for other years and our
other mines. The additional tax provisions raised are US$35.1 million relating to Bulyanhulu,
US$30.4 million relating to North
Mara and US$4.4 million relating to
Tulawaka. Total provisions for uncertain tax positions now amount
to US$128 million.
c) Exploration and development
agreements – Mining Licences
Pursuant to agreements with the Government of the United
Republic of Tanzania, the Group
was issued special mining licences for Bulyanhulu, Buzwagi, and
North Mara mines and mining licences for building materials at
Bulyanhulu and Buzwagi Mines. The agreement requires the Group to
pay to the government of Tanzania
annual rents of US$5,000 per annum
per square kilometre for as long as the Group holds the special
mining licences and US$2,000 per
annum per square kilometre for so long as the Group holds the
mining licences for building materials. The total commitment for
2017 for the remaining special mining licences and mining licences
for building materials amount to US$0.62
million.
d) Purchase commitments
At 31 December 2016, the Group had
purchase obligations for supplies and consumables of approximately
US$47 million (2015: US$43 million).
e) Capital commitments
In addition to entering into various operational commitments in
the normal course of business, the Group entered into contracts for
capital expenditure of approximately US$13
million in 2016 (2015: US$7
million).
20. Related party balances and
transactions
The Group has related party relationships with entities owned or
controlled by Barrick Gold Corporation, which is the ultimate
controlling party of the Group. The Company and its subsidiaries,
in the ordinary course of business, enter into various sales,
purchase and service transactions and other professional services
arrangements with others in the Barrick Group. These transactions
are under terms that are on normal commercial terms and conditions.
These transactions are not considered to be significant.
At 31 December 2016 the Group had
no loans of a funding nature due to or from related parties
(31 December 2015: zero).
21. Post Balance Sheet
Events
A final dividend of US8.4 cents per share has been proposed,
which will result in a total dividend of US10.4 cents per share for
2016. The final dividend is to be proposed at the Annual General
Meeting on 20 April 2017 and paid on
31 May 2017 to shareholders on the
register on 5 May 2016. The
ex-dividend date is 4 May 2016. These
financial statements do not reflect this dividend payable.
Reserves and Resources
Mineral reserves and mineral resources estimates contained in
this report have been calculated as at 31
December 2016 in accordance with National Instrument 43-101
as required by Canadian securities regulatory authorities, unless
otherwise stated. Canadian Institute of Mining, Metallurgy and
Petroleum (CIM) definitions were followed for mineral reserves and
resources. Calculations have been reviewed, verified (including
estimation methodology, sampling, analytical and test data) and
compiled by ACACIA personnel under the supervision of ACACIA
Qualified Persons: John Haywood,
Chief Geologist – Operations, and Samuel
Pobee, Chief Advisor Planning and Mine Optimisation.
However, the figures stated are estimates and no assurances can be
given that the indicated quantities of metal will be produced. In
addition, totals stated may not add up due to rounding.
Mineral reserves have been calculated using an assumed long-term
average gold price of US$1,100.00 per
ounce, a silver price of US$15.00 per
ounce and a copper price of US$2.50
per pound. Reserve calculations incorporate current and/or expected
mine plans and cost levels at each property.
Mineral resources at ACACIA mines have been calculated using an
assumed long-term average gold price of US$1,400.00 per ounce, a silver price of
US$15.00 per ounce and a copper price
of US$2.50 per pound. Mineral
resources at Acacia exploration properties have been calculated
using an assumed long-term average gold price of US$1,500.00 per ounce for Tankoro (50% JV holding
with Sarama Resources) and Golden
Ridge; whilst Nyanzaga (90% JV holding with OreCorp) is a
foreign estimate compiled to JORC Code 2012 and reported above a
lower cut-off grade of 1.5g/t.
Resources have been estimated using varying cut-off grades,
depending on the type of mine or project, its maturity and ore
types at each property. Reserve estimates are dynamic and are
influenced by changing economic conditions, technical issues,
environmental regulations and any other relevant new information
and therefore these can vary from year to year. Resource estimates
can also change and tend to be influenced mostly by new information
pertaining to the understanding of the deposit and secondly the
conversion to ore reserves. In addition, estimates of inferred
mineral resources may not form the basis of an economic analysis
and it cannot be assumed that all or any part of an inferred
mineral resource will ever be upgraded to a higher category.
Therefore, investors are cautioned not to assume that all or any
part of an inferred mineral resource exists, that it can be
economically or legally mined, or that it will ever be
upgraded to a higher category. Likewise, investors are cautioned
not to assume that all or any part of measured or indicated mineral
resources will ever be upgraded to mineral reserves.
See www.acaciamining.com for Mine Gold Reserves & Resources
tables