African Barrick Gold plc (the "Company" or "ABG") Royalty Agreement with Tanzanian Government * Agreement to pay additional voluntary one percent royalty
* Further evidence of commitment to Tanzania and broader stakeholder base
* Follows a number of positive developments in our operating environment
* Strong endorsement for the move from the Government
ABG has concluded discussions with the Tanzanian government with respect to the level of royalty payments made by its operations and, in light of the current gold price environment, agreed to a voluntary additional 1% royalty going forward. This is in addition to the 3% rate stipulated in our Mineral Development Agreements, which remain unchanged.
Commenting on the news, CEO Greg Hawkins said: "This decision to pay an additional voluntary royalty payment is an important step for ABG and one we have taken after careful consideration. As our results over the last two years have shown, the business is delivering strong financial returns given the strength in the gold price and it is important that our broader stakeholder base see the benefit of that. We believe that the mining industry has a well-founded regulatory framework in Tanzania which the government has fully respected, and this initiative is reflective of that and will further strengthen our operational platform over the long term."
Since its creation, ABG has built a strong operating relationship with the Government in Tanzania at all levels, which has been instrumental as we have developed the business. This stability is in contrast to many other areas in the world and is one which gives us the confidence to continue investing in Tanzania at our current operating mines as well as in our portfolio of brownfield and greenfield growth projects. This will not only improve the financial returns of the company but it will also enable us to continue progressing the sustainable development of our host communities and raising the living standards around our mines.
Our focus on building stronger relationships has enabled us to address a number of legacy issues over the past year which will underpin our licence to operate as we further develop our operations. These range from the indirect tax settlement in 2011, as a result of which we started paying corporate tax at our Tulawaka mine, to the recently signed village benefit agreements at North Mara whereby we will invest $8.5 million in our local communities over the next three years and settle a range of longstanding issues.
We have also strengthened our ties with our host country through the establishment of the ABG Maendeleo Fund, to which we are contributing $10 million per year across a range of community development projects. These projects will bring a wide range of benefits to our host communities, with particular emphasis placed on health and education programmes. At the same time, ABG became the first mining company to be cross listed on the Dar es Salaam Stock Exchange in December 2011 and we will continue to work with relevant authorities to facilitate the development of the capital markets in Tanzania and their ability to attract additional investment to the country.
As we have increased our level of commitment to Tanzania, we have been encouraged by the support we have received from the Government and other regulatory bodies. This has been evident in the conclusion of the indirect tax settlement last year as well as the recent granting of waste permits at our North Mara mine. We have also been encouraged by the formation of the Mining Advisory Board which will deal with the renewal of our Special Mining Licence at North Mara as one of its immediate priorities.
In 2011, ABG made a direct contribution to Tanzania of $176 million in taxes borne and collected and spent a further $400 million with Tanzanian registered suppliers and contractors and today's agreement will help to sustain our contribution going forward. At the same time, we tripled our dividend payout for the year, demonstrating that the continued success of our business will bring benefits to all our stakeholders.
For further information contact:
African Barrick Gold plc +44 (0)207 129 7150
Andrew Wray, Head of Corporate Development & Investor Relations
Giles Blackham, Investor Relations Manager
RLM Finsbury +44 (0)20 7251 3801
ABG is Tanzania's largest gold producer and one of the five largest gold producers in Africa. We have four producing mines, all located in northwest Tanzania, and several exploration projects at various stages of development. We have a high-quality asset base, solid growth opportunities and a clear strategy.
The key pillars to our strategy are:
* driving operating efficiencies to optimise production from our existing asset base;
* growing through near mine expansion and development of advanced-stage projects; and
* organic greenfield growth and acquisitions in Africa.
Maintaining our licence to operate through acting responsibly in relation to our people, the environment and the communities in which we operate is central to achieving our objectives.
ABG is a UK public company with its headquarters in London. We are listed on the Main Market of the London Stock Exchange under the symbol ABG and have a secondary listing on the Dar es Salaam Stock Exchange. Historically and prior to our initial public offering (IPO), our operations comprised the Tanzanian gold mining business of Barrick Gold Corporation (Barrick), our majority shareholder. ABG reports in US dollars in accordance with IFRS as adopted by the European Union, unless otherwise stated in this report.
This announcement is for information purposes only and does not constitute an invitation or offer to underwrite, subscribe for or otherwise acquire or dispose of any securities of ABG in any jurisdiction.
This announcement 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, products and services, 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 ABG, which could cause actual results and developments to differ materially from those expressed in, or implied by, the forward-looking statements. Factors that could cause or contribute to differences between the actual results, performance and achievements of ABG include, but are not limited to, political, economic and business conditions, industry trends, competition, fluctuations in the spot and forward price of gold or certain other commodity prices, changes in regulation, currency fluctuations (including the US dollar, South African rand and Tanzanian shilling exchange rates), ABG's ability to successfully integrate future acquisitions, ABG's ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves, and to timely and successfully process its mineral reserves, risk of trespass, theft and vandalism, changes in its business strategy as well as risks and hazards associated with the business of mineral exploration, development, mining and production. Although ABG's management believes that the expectations reflected in such forward-looking statements are reasonable, ABG cannot give assurances that such statements will prove to be correct. Accordingly, investors should not place reliance on forward looking statements in this announcement. Any forward-looking statements in this announcement only reflect information available at the time of preparation. Subject to the requirements of the Disclosure and Transparency Rules and the Listing Rules or applicable law, ABG explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this announcement that may occur due to any change in ABG's expectations or to reflect events or circumstances after the date of this announcement. Nothing in this announcement should be construed as a profit forecast or estimate.
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