ACA.L Regulatory News (ACA)

23 April 2015 Results for the three months ended 31 March 2015 (Unaudited) Based on IFRS and expressed in US Dollars (US$) Acacia Mining plc ("Acacia'') reports first quarter results "We have delivered steady production over the first quarter, with 181,660ounces of gold produced, in line with the previous quarter and underpinned bycontinued strong production at North Mara", said Brad Gordon, Chief ExecutiveOfficer of Acacia Mining. "We saw a marginal increase in all-in sustaining cost(AISC) to US$1,117 per ounce sold compared to the previous quarter, as well asa reduction in our net cash balance, due to the timing of sales as well asseveral short term challenges at Bulyanhulu, principally related to thetailings reclaim and equipment availabilities. We have addressed these issuesand continued to implement a range of other operational improvements that willdeliver progressive improvement at the mine over the rest of the year. Weremain on track to achieve our full year production guidance of 750-800koz ofgold at AISC of between US$1,050-$1,100 per ounce, with production continuingto be second half weighted." Operational Highlights Gold production of 181,660 ounces, 8% higher than Q1 2014 Gold sales of 171,415 ounces, 7% higher than Q1 2014, and 6% below productiondue to the timing of concentrate sales AISC1 of US$1,117 per ounce sold, 1% lower than Q1 2014 Cash costs1 of US$783 per ounce sold, 4% higher than Q1 2014 Gokona Underground progressing well and on track for first production in Q22015 Further expansion of our footprint in West Africa with the entry into twoadditional earn-in agreements in Burkina Faso Financial Highlights Revenue of US$215 million, broadly in line with Q1 2014, as increased ouncessold were offset by the 7% lower gold price EBITDA1,2 of US$53 million, 18% lower than 2014, resulting from the loweraverage realised gold price and higher cash costs Net earnings2 of US$9 million (US2.2 cents per share), compared to US$22.4million in Q1 2014 Operational cash flow of US$47 million, 7% down on Q1 2014 due to the loweraverage realised gold price Cash position of US$286 million as at 31 March 2015 compared to US$254 millionat 31 March 2014 Capital expenditure2 of US$41 million, 26% lower than Q1 2014 due to lowerexpansionary capital expenditures Three months ended Year ended 31 31 March December (Unaudited) 2015 2014 2014 Gold production (ounces) 181,660 168,375 718,651 Gold sold (ounces) 171,415 159,384 703,680 Cash cost (US$/ounce)1 783 756 732 AISC (US$/ounce)1 1,117 1,131 1,105 Average realised gold price (US$/ounce)1 1,207 1,303 1,258 (in US$'000) Revenue 214,894 216,287 930,248 EBITDA 1,2 52,975 64,731 252,716 Net earnings2 9,207 22,410 90,402 Basic earnings per share (EPS) (cents)2 2.2 5.5 22.1 Cash generated from operating activities2 47,129 50,726 289,528 Capital expenditure2,3 41,433 55,780 253,802 Cash balance 285,569 254,094 293,850 1 These are non-IFRS measures. Refer to page 11 for definitions 2 EBITDA, net earnings, earnings per share, cash generated from operatingactivities and capital expenditure include continuing and discontinuedoperations 3 Excludes non-cash capital adjustments (reclamation asset adjustments) andincludes finance lease purchases Other Developments Expansion of exploration acreage in Burkina Faso We continued to expand our footprint in the prospective Houndé Belt in BurkinaFaso through the signing of two further earn-in agreements with CanyonResources and Thor Explorations Ltd. The Thor Explorations agreement allows Acacia to earn up to an 80% interest inthe Central Houndé Project, with an initial earn-in of a 51% interest by thecompletion of agreed exploration expenditures over a three year period, with anadditional 29% interest to be earned by the completion of a pre-feasibilitystudy on a mineral resource on the project area. The Canyon Resources agreementallows Acacia to earn up to a 75% interest in the Pinarello and Konkolikanprojects by the completion of an up-front cash payment and agreed explorationexpenditure over a two year period. Gokona Underground We have made good progress on the construction of the underground operation atthe Gokona pit during the quarter, with a further 947 metres of developmentadvanced, making a total of over 1,200 metres since the project commenced.During the quarter we received initial approvals for the revision to theEnvironmental Impact Assessment (EIA) required for the underground operation tobegin commercial production. The EIA has now been passed to the VicePresident's Office for final approvals and certification. We continue to expectto commence stoping within Q2 2015 upon receipt of the EIA certificate. Indirect taxes During the quarter we received gross VAT refunds of US$25.2 million, howeverdue to delays to the processing of repayments, and higher than normal outflowsdue to seasonal effects, the total indirect tax receivable not covered by the2011 Memorandum of Settlement increased by approximately US$6 million to US$52million. Discussions with the Tanzanian Government are continuing with respectto the establishment of an appropriate mechanism to safeguard therecoverability of VAT payments over the long term, specifically with respect toVAT paid on domestic goods, and we will provide feedback as discussionsprogress. Key statistics Three months ended Year ended 31 31 March December (Unaudited) 2015 2014 2014 Tonnes mined (thousands of tonnes) 10,153 9,537 41,684 Ore tonnes mined (thousands of tonnes) 2,507 1,793 8,170 Ore tonnes processed (thousands of tonnes) 2,075 1,845 8,413 Process recovery rate (percent)* 88.0% 89.1% 88.0% Head grade (grams per tonne)* 3.1 3.2 3.0 Gold production (ounces) 181,660 168,375 718,651 Gold sold (ounces) 171,415 159,384 703,680 Copper production (thousands of pounds) 3,499 2,976 14,068 Copper sold (thousands of pounds) 2,827 2,517 13,448 Cash cost per tonne milled (US$/t)1 65 65 61 Per ounce data Average spot gold price2 1,218 1,293 1,266 Average realised gold price1 1,207 1,303 1,258 Total cash cost1 783 756 732 All-in sustaining cost1 1,117 1,131 1,105 Average realised copper price (US$/lb) 2.47 2.96 3.01 Financial results Year ended Three months ended 31 31 March December (Unaudited, in US$'000) 2015 2014 2014 Revenue 214,894 216,287 930,248 Cost of sales (174,941) (159,141) (688,278) Gross profit 39,953 57,145 241,970 Corporate administration (9,390) (6,356) (32,685) Share based payments (1,518) (3,324) (8,388) Exploration and evaluation costs (4,694) (4,970) (18,284) Corporate social responsibility expenses (2,080) (2,496) (10,787) Other charges (1,960) (6,623) (47,921) Profit before net finance expense and taxation 20,311 33,376 123,905 Finance income 346 350 1,324 Finance expense (3,239) (2,402) (10,043) Profit before taxation 17,418 31,324 115,186 Tax expense (8,211) (10,669) (25,977) Net profit from continuing operations 9,207 20,655 89,209 Discontinued operations: Net (loss)/gain from discontinued operations - 1,288 726 Net profit for the period 9,207 21,943 89,935 Attributed to: Owners of the parent (net earnings) 9,207 22,410 90,402 Non-controlling interests - (467) (467) 1 These are non-IFRS financial performance measures with no standard meaningunder IFRS. Refer to"Non IFRS measures"' on page 11 for definitions. 2 Reflect the London PM fix price. *Reported process recovery rates and head grade include tailings retreatment atBulyanhulu in Q1 2015. Excluding the impact of the tailings retreatment processrecovery would be 89.0% with head grade being 3.3g/t For further information, please visit our website: www.acaciamining.com orcontact: Acacia Mining plc +44 (0) 207 129 7150 Brad Gordon, Chief Executive Officer Andrew Wray, Chief Financial Officer Giles Blackham, Investor Relations Manager Bell Pottinger +44 (0) 203 772 2500 Daniel Thöle About Acacia Mining plc Acacia Mining plc (LSE:ACA), formerly African Barrick Gold, is Tanzania'slargest gold miner and one of the largest producers of gold in Africa. We havethree producing mines, all located in north-west Tanzania: Bulyanhulu, Buzwagi,and North Mara and a portfolio of exploration projects in Tanzania, Kenya andBurkina Faso. Our approach is focused on strengthening our three core pillars; our business,our people and our relationships. Our name change from African Barrick Gold toAcacia Mining reflects a new approach to mining, and an ambition to create aleading African company. Acacia Mining is a UK public company headquartered in London. We are listed onthe Main Market of the London Stock Exchange with a secondary listing on theDar es Salaam Stock Exchange. Barrick Gold Corporation remains our majorityshareholder. Acacia Mining reports in US dollars and in accordance with IFRS asadopted by the European Union, unless otherwise stated in this announcement. Conference call A conference call will be held for analysts and investors on 23 April 2015 at9.00am London time. The access details for the conference call are as follows: Participant dial in: +44 (0) 203 003 2666 / +1 866 966 5335 Password: Acacia A recording of the conference call will be available on our websitewww.acaciamining.com after the call. FORWARD- LOOKING STATEMENTS This report includes "forward-looking statements" that express or implyexpectations of future events or results. Forward-looking statements arestatements that are not historical facts. These statements include, withoutlimitation, financial projections and estimates and their underlyingassumptions, statements regarding plans, objectives and expectations withrespect to future production, operations, costs, projects, and statementsregarding future performance. Forward-looking statements are generallyidentified by the words "plans," "expects," "anticipates," "believes,""intends," "estimates" and other similar expressions. All forward-looking statements involve a number of risks, uncertainties andother factors, many of which are beyond the control of Acacia, which couldcause actual results and developments to differ materially from those expressedin, or implied by, the forward-looking statements contained in this report.Factors that could cause or contribute to differences between the actualresults, performance and achievements of Acacia include, but are not limitedto, changes or developments in political, economic or business conditions ornational or local legislation or regulation in countries in which Acaciaconducts - or may in the future conduct - business, industry trends,competition, fluctuations in the spot and forward price of gold or certainother commodity prices (such as copper and diesel), currency fluctuations(including the US dollar, South African rand, Kenyan shilling and Tanzanianshilling exchange rates), Acacia's ability to successfully integrateacquisitions, Acacia's ability to recover its reserves or develop new reserves,including its ability to convert its resources into reserves and its mineralpotential into resources or reserves, and to process its mineral reservessuccessfully and in a timely manner, Acacia's ability to complete landacquisitions required to support its mining activities, operational ortechnical 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 strategyincluding, the ongoing implementation of operational reviews, as well as risksand hazards associated with the business of mineral exploration, development,mining and production and risks and factors affecting the gold mining industryin general. Although Acacia's management believes that the expectationsreflected in such forward-looking statements are reasonable, Acacia cannot giveassurances that such statements will prove to be correct. Accordingly,investors should not place reliance on forward-looking statements contained inthis report. Any forward-looking statements in this report only reflect informationavailable at the time of preparation. Subject to the requirements of theDisclosure and Transparency Rules and the Listing Rules or applicable law,Acacia explicitly disclaims any obligation or undertaking publicly to update orrevise any forward-looking statements in this report, whether as a result ofnew information, future events or otherwise. Nothing in this report should beconstrued as a profit forecast or estimate and no statement made should beinterpreted to mean that Acacia's profits or earnings per share for any futureperiod will necessarily match or exceed the historical published profits orearnings per share of Acacia. First Quarter Review Production for the quarter of 181,660 ounces is in line with Q4 2014, asguided, and 8% higher than the same period last year. All-in sustaining costsamounted to US$1,117 per ounce sold, a 1% reduction on Q1 2014, althoughmarginally higher than Q4 2014 as a result of the lower sales ounces. Cashcosts of US$783 per ounce sold were 4% higher than in Q1 2014, mainly as aresult of the impact of increased maintenance and contracted services costs atBulyanhulu and lower capitalisation of waste movement at Buzwagi. As previouslyoutlined, our definition of gold production changed as of 1 January 2015 togold poured and no longer includes changes to our gold-in-circuit ounces. Wehave not restated prior period performance due to the immateriality of thechange. North Mara's production of 75,614 ounces was 10% higher than Q1 2014 due toimproved throughput rates and a higher head grade. AISC fell by 16% to US$828per ounce sold compared to Q1 2014. This was predominantly due to the increasedproduction base and the impact of higher sales ounces on flat capitalexpenditure. During the quarter we progressed the development of theunderground exploration portal and remain on track for first production in Q22015. Bulyanhulu saw a 12% increase in production to 61,718 ounces compared to Q12014 primarily as a result of the processing of reclaimed tailings whichdelivered 3,484 ounces of production and increased run of mine throughputpartially offset by lower head grades and recoveries. During the quarter waterbalance issues on site led to the reclaimed tailings operation being offlinefor over half of the period, which was the primary reason behind reducedtailings throughput of 173kt for the quarter, being approximately a third ofplanned levels. These issues have now been resolved. AISC of US$1,453 per ouncesold was 27% higher than Q1 2014 driven by increased cash costs, as a result ofadditional investment in maintenance to address equipment availabilities andcontracted services costs, combined with increased sustaining capital andinvestment in underground development, primarily related to the Upper East andLower West projects that started later in 2014. At Buzwagi, gold production for the quarter of 44,328 ounces was in line withQ1 2014, as increased recoveries due to process plant performance enhancementsover the course of 2014 were offset by marginally lower grade. AISC reduced by12% to US$1,118 compared to Q1 2014 mainly as a result of lower capitaliseddevelopment expenditure. Total group tonnes mined during the quarter amounted to 10.2 million, anincrease of 6% on Q1 2014 as a result of increased mining activity at Buzwagi.Ore tonnes mined were 2.5 million compared to 1.8 million in 2014, as a resultof increased ore tonnes mined from both North Mara and Buzwagi. Ore tonnes processed amounted to 2.1 million, an increase of 12% on Q1 2014primarily driven by increased throughput at Bulyanhulu and North Mara. Head grade for the year of 3.1 g/t was 3% lower than in Q1 2014 (3.2 g/t).Excluding the impact of the reclaimed tailings, head grade was marginallyhigher year on year with an increased grade at North Mara partially offset byreduced grade at Bulyanhulu and Buzwagi. Our cash costs for the quarter were 4% higher than in Q1 2014, and amounted toUS$783 per ounce sold. The increase was primarily due to: Lower capitalisation of waste stripping expenses at Buzwagi and North Mara(US$90/oz); Increased contracted services and maintenance costs relating to contracted oredevelopment work mainly relating to the Upper East and Lower West projectswhich started in Q2 2014 at Bulyanhulu (US$77/oz); and Increased consumable costs predominantly at Bulyanhulu and Buzwagi driven byincreased activity (US$20/oz). Partly offset by: The impact of the increased production base (US$101/oz) Lower fuel costs due to a lower diesel price combined with improved Tanescoreliance partially offset by the impact of realised hedge losses, predominantlyrelating to oil collar contracts, of US$2.1 million (US$25/oz); and Lower labour costs specifically driven by a reduction in internationalemployees (US$36/oz). AISC of US$1,117 per ounce sold for the quarter was 1% lower than Q1 2014.Increased cash costs and higher sustaining capital and capitalised developmentexpenditure were offset by the impact of a 12,000 ounce (8%) increase in salesounces with a resultant positive impact on unit costs. Cash generated from operating activities amounted to US$47.1 million, US$3.6million lower than in Q1 2014, driven by the US$96 per ounce reduction inaverage realised gold price, partially offset by improved working capitalmovements. Capital expenditure for the quarter amounted to US$41.4 million compared toUS$55.8 million in Q1 2014. Capital expenditure primarily comprised capitaliseddevelopment expenditure (US$27.5 million), component and equipment costs(US$8.7 million) and investments in tailings and infrastructure (US$3.9million). Cash balance at the end of March 2015 stood at US$286 million, US$31 millionhigher than in Q1 2014. Free cash generation during the quarter was impacted bygold sales being approximately 10,000 ounces lower than production, thefulfilment of accruals relating to previously incurred capital expenditures ofapproximately US$10 million and land payments of US$2.5 million. Totalborrowings at the end of the quarter amounted to US$142 million, with the firstrepayment of approximately US$16 million due in H2 2015. Mine Site Review Bulyanhulu Key statistics Three months ended 31 Year ended 31 March December (Unaudited) 2015 2014 2014 Key operational information: Ounces produced oz 61,718 55,179 234,786 Ounces sold oz 54,486 49,121 215,740 Cash cost per ounce sold1 US$/oz 921 811 812 AISC per ounce sold1 US$/oz 1,453 1,145 1,266 Copper production Klbs 1,580 1,296 5,289 Copper sold Klbs 1,161 1,194 4,925 Run-of-mine processing: Underground ore tonnes hoisted Kt 242 211 909 Ore milled Kt 250 220 906 Head grade g/t 8.3 8.5 8.7 Mill recovery % 87.0% 91.7% 88.0% Ounces produced oz 58,234 55,179 222,381 Cash cost per tonne milled1 US$/t 201 181 193 Reprocessed tailings: Ore milled Kt 173 - 617 Head grade g/t 1.1 - 1.1 Mill recovery % 55.7% - 56.9% Ounces produced oz 3,484 - 12,405 Capital Expenditure - Sustaining capital US$('000) 8,982 2,148 23,388 - Capitalised development US$('000) 16,120 11,256 60,151 - Expansionary capital US$('000) 784 14,859 48,010 25,886 28,263 131,549 - Non-cash reclamation assetadjustments US$('000) 3,158 5,665 6,141 Total capital expenditure US$('000) 29,044 33,928 137,690 1These are non-IFRS financial performance measures with no standard meaningunder IFRS. Refer to"Non IFRS measures"' on page 11 for definitions. Operating performance Gold production for the quarter of 61,718 ounces was 12% higher than the prioryear period, as a result of the processing of reclaimed tailings whichdelivered 3,484 ounces of production, and a 14% increase in tonnes processedfrom the underground operation. This was in part offset by a 2% reduction ingrade, primarily due to the processing of lower grade development ore from theUpper East zone and a 5% reduction in recoveries due to underperformance of theelution circuit. Following the completion of remediation works, recoveries havenow returned to planned levels. Total development metres during the quarter were 57% higher than Q1 2014,reflecting the improvement in productivity per jumbo achieved over the lastyear and we expect to see a further increase during Q2 as additionalventilation removes current constraints. Average long-hole stope width duringthe quarter was 2.9 metres, a 31% reduction over Q1 2014, which reflectsimproved operational practices and reduced dilution. The reduced stoping width,together with improved development productivities and access to higher gradestopes, is expected to drive an improvement in mined grade. Run of mine production was in line with Q4 2014, which was below planprincipally due to low availabilities of 3 and 7 yard loaders which affectedthe mucking of higher grade long-hole stopes. The increased investment inmaintenance in 2015 is addressing this issue as we undertake component changeouts which will bring these units back into line with their planned maintenanceschedules and improve availabilities. Water balance issues on site led to thereclaimed tailings operation being offline for over half of the period. Theseissues have also now been resolved and were the primary reason for the reducedtailings throughput of 173kt for the quarter, being approximately a third ofplanned levels. We expect to return to normal throughput rates from Q2 2015. Gold ounces sold of 54,486 ounces were 11% higher than Q1 2014 primarily due tothe higher production base, but were lower than production due to the impact ofthe timing of production on concentrate shipments leaving site. Copperproduction of 1.6 million pounds for the quarter was 22% higher than in Q1 2014due to higher copper grades combined with higher run of mine throughput. Cash costs for the quarter of US$921 per ounce sold were 14% higher than theprior year period of US$811, driven by higher contracted service costs relatedto the Upper East and Lower West projects, combined with additional investmentin maintenance and an activity driven increase in consumable costs. These werein part offset by the higher production base, lower labour costs mainly as aresult of a reduction in international employees and increased capitalisationof development costs. AISC per ounce sold for the year of US$1,453 was 27% higher than in Q1 2014(US$1,145), driven by higher cash costs and increased sustaining capital,together with the capitalisation of the increased investment in undergrounddevelopment, these were slightly offset by increased sales ounces on a per unitbasis. Capital expenditure for the quarter before reclamation adjustments amounted toUS$25.9 million, 8% lower than in Q1 2014 (US$28.3 million). Lower expansioncapital was partially offset by increased sustaining capital and capitaliseddevelopment expenditure. Capital expenditure for the quarter consisted mainlyof capitalised underground development costs (US$16.1 million), component andequipment costs (US$6.7 million) and investment in tailings and infrastructure(US$2.3 million). Buzwagi Key statistics Three months ended 31 Year ended 31 March December (Unaudited) 2015 2014 2014 Key operational information: Ounces produced oz 44,328 44,557 210,063 Ounces sold oz 41,395 42,963 213,399 Cash cost per ounce sold1 US$/oz 1,004 927 791 AISC per ounce sold1 US$/oz 1,118 1,274 1,055 Copper production Klbs 1,920 1,681 8,780 Copper sold Klbs 1,666 1,323 8,523 Mining information: Tonnes mined Kt 6,211 5,543 24,510 Ore tonnes mined Kt 1,375 1,021 4,692 Processing information: Ore milled Kt 962 970 4,086 Head grade g/t 1.5 1.6 1.7 Mill recovery % 94.0% 88.2% 92.4% Cash cost per tonne milled1 US$/t 43 41 41 Capital Expenditure - Sustaining capital US$('000) 2,027 1,861 12,817 - Capitalised development US$('000) 22 9,632 31,357 2,049 11,493 44,174 - Non-cash reclamation assetadjustments US$('000) 620 665 (1,131) Total capital expenditure US$('000) 2,669 12,158 43,043 1These are non-IFRS financial performance measures with no standard meaningunder IFRS. Refer to"Non IFRS measures"' on page 11 for definitions. Operating performance Gold production for the quarter of 44,328 ounces was in line with Q1 2014. As aresult of operational improvements made to the process plant over the course of2014, recovery rates increased to 94% from 88% in Q1 2014, which was in turnoffset by the marginally lower grade. Mill throughput was in line with Q1 2014,but below nameplate capacity primarily due to an unplanned two week shutdown inJanuary as a result of mechanical issues with the primary ore conveyor. Goldsold for the quarter amounted to 41,395 ounces, 7% lower than production due tothe impact of the timing of production on concentrate shipments leaving site.Total tonnes mined for the quarter of 6.2 million tonnes were 12% higher thanin Q1 2014 due to improved equipment availabilities. Copper production of 1.9 million pounds for the quarter was 14% higher than inQ1 2014 driven by the improved grades. Cash costs for the quarter of US$1,004 per ounce sold were 8% higher than in Q12014 (US$927). Cash costs were impacted by the lower capitalisation of wastestripping costs and increased maintenance and consumable costs due to increasedmining activity. This was partially offset by lower energy and fuel costsdriven by lower diesel unit costs and lower reliance on self-generation, andlower labour costs as a result of a reduction in international employees. AISC per ounce sold for the year of US$1,118 was 12% lower than in Q1 2014(US$1,274). This was driven by lower capitalised stripping expenditurepartially offset by increased cash costs. Capital expenditure for the quarter before reclamation adjustments of US$2.0million was 82% lower than in Q1 2014 (US$11.5 million). The reduction ismainly due to lower capitalisation of stripping costs due to a lower stripratio. Key capital expenditure for the quarter included investment in tailingsand infrastructure (US$0.9 million) and component change out costs (US$1.1million). North Mara Key statistics Three months ended 31 Year ended 31 March December (Unaudited) 2015 2014 2014 Key operational information: Ounces produced oz 75,614 68,639 273,803 Ounces sold oz 75,535 67,300 274,540 Cash cost per ounce sold1 US$/oz 563 607 623 AISC per ounce sold1 US$/oz 828 980 947 Mining information: Tonnes mined Kt 3,691 3,783 16,265 Ore tonnes mined Kt 882 560 2,569 Processing information: Ore milled Kt 691 655 2,804 Head grade g/t 3.9 3.7 3.5 Mill recovery % 87.8% 87.8% 87.2% Cash cost per tonne milled1 US$/t 62 62 61 Capital Expenditure - Sustaining capital US$('000) 1,733 3,531 18,049 - Capitalised development US$('000) 11,321 12,267 40,900 - Expansionary capital US$('000) 212 - 13,126 13,266 15,798 72,075 - Non-cash reclamation assetadjustments US$('000) 2,006 3,976 16,003 Total capital expenditure US$('000) 15,272 19,774 88,078 1These are non-IFRS financial performance measures with no standard meaningunder IFRS. Refer to"Non IFRS measures"' on page 11 for definitions. Operating performance Production for the quarter of 75,614 ounces was 10% higher than the prior yearperiod primarily as a result of higher throughput rates, which exceeded theprior year period by 5%, mainly due to business improvement initiatives in boththe mining and milling areas, and a 5% higher head grade driven by the highergrades from both the Gokona and Nyabirama pits. Gold ounces sold for thequarter of 75,535 ounces were in line with production, and 12% higher than theprior year due to the higher production base. Total tonnes mined for the period of 3.7 million tonnes were 2% lower than inQ1 2014 as a result of reduced working areas in the Gokona pit as it nearscompletion. Cash costs for the year of US$563 per ounce sold were 7% lower than in Q1 2014(US$607). Cash costs were positively impacted by the higher production base,lower labour costs as a result of the reduction in the international workforce,lower fuel costs due to lower unit prices and lower maintenance costs due toimproved maintenance practices, partially offset by lower capitalisation ofwaste stripping costs and increased contracted services mainly relating todrilling contractors. AISC per ounce sold for the quarter of US$828 was 16% lower than in Q1 2014(US$980) predominantly due to lower cash costs, and the impact of the highersales ounces on unit costs for capitalised development and sustaining capitalexpenditure. The development of the underground operation at the Gokona pit progressed wellduring the quarter, with a further 947 metres of development advanced, making atotal of over 1,200 metres since the project commenced. During the quarter wereceived initial approvals for the revision to the Environmental ImpactAssessment (EIA) required for the underground operation to begin commercialproduction. The EIA has now been passed to the Vice President's Office forfinal approvals and certification. We continue to expect to commence stopingand initial production within Q2 2015 upon receipt of the EIA certificate. Capital expenditure for the quarter before reclamation adjustments of US$13.3million was 16% lower than in Q1 2014 (US$15.8 million), due to lowersustaining capital expenditure. Key capital expenditure included undergrounddevelopment costs relating to the Gokona Underground project (US$6.7 million),open pit capitalised stripping (US$4.6 million), investments in component costs(US$0.9 million) and tailings and infrastructure ($0.8 million). Exploration Review During Q1 2015, the exploration group focused on greenfield programmes in Kenyaand Burkina Faso and undertook soil sampling, geophysical surveys and drillingprogrammes. Exploration spend was in line with expectations at US$4.6 millionfor the quarter. Greenfield Exploration During the quarter we have significantly progressed our understanding of theWest Kenya joint venture properties and have seen encouraging results fromdiamond core drilling. At our joint venture with Sarama Resources Limited("Sarama") we have commenced extensive drill programmes, geophysical surveysand soil sampling and have had early success in identifying extensions to nearsurface gold zones. Furthermore, we have added to our Houndé Belt portfoliowith two new earn-in agreements signed with Canyon Resources and ThorExplorations Ltd. We continue to look throughout Africa for opportunities tofurther enhance and diversify our exploration portfolio through low cost jointventures or option agreements. Kenya West Kenya Joint Venture Projects The focus of activities during Q1 2015 has been on following up gold zonesintersected in aircore drilling completed during 2014 along the LirandaCorridor (Kakamega Dome Camp). Kakamega Dome Camp - Liranda Corridor In late 2014, we commenced a diamond core drill programme to investigate theorientation and continuity of gold mineralisation intersected in the aircoredrilling within the Liranda Corridor. During Q1 2015, we completed 19 diamondcore holes for 6,163 metres bringing the programme total to 36 holes for 9,411metres. To date we have received results for 27 of 36 holes with 15 holesreturning significant assays (>1g/t), including better results of: KDLCDD0003: 10m @ 17.4g/t Au from 18m (including 5m @ 33.4g/t Au from 20m)* KDLCDD0005: 4m @ 4.85g/t from 71m** KDLCDD0008: 6m @ 3.08g/t Au from 159m** KDLCDD0012: 0.6m @ 20.0g/t Au from 101.5m** LCD0013: 3m @ 8.88g/t Au from 62m LCD0019: 16m @ 2.56g/t Au from 91m LCD0028: 1m @ 41.9g/t Au from 164m Notes: * intersection reported January but updated with final assay analysis, ** intersection reported in January 2015 Gold mineralised zones encountered to date occur with quartz veining andassociated carbonate alteration with pyrite, arsenopyrite, +/- sphaleritewithin mafic volcanic, porphyry and argillite units. Structural modelling ison-going to fully understand the controls on quartz veining and mineralisedzones at the different locations along the extensive strike extent of LirandaCorridor. We expect to complete the Phase I diamond core programme during Q22015 and will then target priority areas as part of the Phase II drilling withdeeper drill holes (400-500m) in some areas. Burkina Faso In April we announced the completion of two new earn-in agreements, with CanyonResources and Thor Explorations Ltd, within the Houndé Belt of Burkina Faso,adjacent to and nearby the existing South Houndé earn-in agreement with Sarama.Together with the existing South Houndé JV in Burkina Faso (Sarama Resources/Acacia JV), the three joint ventures provide Acacia exposure to approximately2,400km2 of the prospective Houndé Belt. This land package has been built overthe past five months and represents a large and coherent land holding,providing Acacia with the opportunity to explore a well-endowed greenstonebelt. The agreements now cover an area larger than the licence areas Acaciaholds in either Tanzania or Kenya. The Thor Explorations agreement allows Acacia to earn up to an 80% interest inthe Central Houndé Project. Initially Acacia can earn a 51% interest by thecompletion of agreed exploration expenditures over a three year period,following which we have the potential to earn an additional 29% interest in theproject by completing a pre-feasibility study on a mineral resource on theproject area. The Canyon Resources agreement allows Acacia to earn up to a 75%interest in the Pinarello and Konkolikan Projects by the completion of anup-front cash payment and agreed exploration expenditure over a two yearperiod. Acacia will manage and undertake exploration programmes on both ofthese new earn-in projects. The planned exploration expenditures during the remainder of 2015 across thenew projects totals approximately US$1 million and forms part of the forecastUS$20 million 2015 exploration budget. We expect field exploration programmesto commence on both new earn-in areas during Q2 2015, with soil sampling, augerand aircore drilling and IP geophysical programmes. South Houndé Joint Venture In November 2014, Acacia entered into an earn-in agreement with Sarama wherebyAcacia can earn an interest of up to 75% at Sarama's highly prospective SouthHoundé Project in Burkina Faso. Sarama has identified a number of high-qualityexploration targets including the 1.5Moz Au Tankoro Resource. The TankoroResource (comprising the MM, MC and Phantom Zones) extends over a 7.3 kilometrestrike length within a 25 kilometres long mineralised corridor, one of threesuch mineralised corridors on the property. Exploration programmes during thequarter have started to test for high-grade extensions to the existing Tankororesource base, both along strike and at depth, as well as near surfaceextensions to known mineralisation using aircore and reverse circulationdrilling. Additionally, aircore and reverse circulation drilling was undertakenon some of the regional targets (Obi, Guy and Dlarakoro). Results to date from the various drilling programmes, especially the aircoredrilling, have been encouraging and the focus for Q2 2015 will be onestablishing the controls and geometry of high grade structures on the MM andMC Zone resource areas to enable better targeting of potential undergroundextensions. In addition to the drilling programmes targeting existing soilanomalies and extensions to known zones, a detailed aeromagnetic survey wascompleted across the entire South Houndé project area, ground InducedPolarisation (IP) geophysical surveys were extended to the northwest of MM andMC Zones, and soil sampling was undertaken in the "Tiyikoro Gap" to givecomplete soil sampling coverage across the project. Brownfield Exploration Bulyanhulu During 2015, the Bulyanhulu underground geology team is continuing resourceexpansion drilling on Reef 2, targeting 5Moz of resource additions over thenext 3-5 years. At the same time we plan to undertake near-mine surfacedrilling, targeting extensions to existing reefs outside the current resourceand new deposits. The initial surface reverse circulation and diamond coredrill programmes are expected to commence in late Q2 2015 and will test theSafari, Nose Zone and NW Extensions prospects, all within 500 metres to 4kilometres of the Bulyanhulu operation. Resource extension drilling testing theReef 2 potential west of the currently defined resources is also expected tocommence during Q2 2015 with development drives now completed and ready foraccess by drill rigs. Non-IFRS Measures Acacia has identified certain measures in this report that are not measuresdefined under IFRS. Non-IFRS financial measures disclosed by management areprovided as additional information to investors in order to provide them withan alternative method for assessing Acacia's financial condition and operatingresults. These measures are not in accordance with, or a substitute for, IFRS,and may be different from or inconsistent with non-IFRS financial measures usedby other companies. These measures are explained further below. Average realised gold price per ounce sold is a non-IFRS financial measurewhich excludes from gold revenue: Unrealised mark-to-market gains and losses on provisional pricing from copperand gold sales contracts; and Export duties. Cash cost per ounce sold is a non-IFRS financial measure. Cash costs includeall costs absorbed into inventory, as well as royalties, production taxes andrealised gains/losses on operating hedges, and exclude capitalised productionstripping costs, inventory purchase accounting adjustments, unrealised gains/losses from non-hedge currency and commodity contracts, depreciation andamortisation and corporate social responsibility charges. Cash cost iscalculated net of co-product revenue. A reconciliation between cash cost perounce sold and cost of sales is presented below: Three months ended 31(US$'000) March (Unaudited) 2015 2014 Cost of Sales Direct mining costs 126,421 115,248 Third party smelting and refining fees 4,209 4,134 Realised losses on economic fuel, copper and currency hedges 2,107 - Royalty expense 9,561 9,763 Depreciation and amortisation 32,642 29,998 Total cost of sales 174,941 159,142 Total cost of sales 174,941 159,142 Deduct: depreciation and amortisation (32,642) (29,998) Deduct: Co-product revenue (8,057) (8,646) Total cash cost 134,242 120,499 Total ounces sold 171,416 159,384 Cash cost per ounce 783 756 All-in sustaining cost (AISC) is a non-IFRS financial measure. The measure isin accordance with the World Gold Council's guidance issued in June 2013. It iscalculated by taking cash cost per ounce sold and adding corporateadministration costs, reclamation and remediation costs for operating mines,corporate social responsibility expenses, mine exploration and study costs, capitalised stripping and underground development costs and sustaining capitalexpenditure. This is then divided by the total ounces sold. A reconciliationbetween cash cost per ounce sold and AISC for the key business segments ispresented below: (Unaudited) Three months ended 31 March 2015 Three months ended 31 March 2014 ACA Group ACA Group North ongoing North ongoing(US$/oz sold) Bulyanhulu Mara Buzwagi operations Bulyanhulu Mara Buzwagi operations Cash cost per ounce sold 921 563 1,004 783 811 607 927 756 Corporate administration 51 41 47 55 43 32 40 40 Share based payments 6 0 -2 9 1 2 13 21 Rehabilitation 6 24 7 14 7 18 9 12 Mine exploration 2 2 0 2 2 1 1 2 CSR expenses 6 10 12 12 7 18 19 16 Capitalised development 296 150 1 160 229 182 224 208 Sustaining capital 165 38 49 82 45 120 44 76 Total continuing operations 1,453 828 1,118 1,117 1,145 980 1,274 1,131 AISC is intended to provide additional information on the total sustaining costfor each ounce sold, taking into account expenditure incurred in addition todirect mining costs, depreciation and selling costs. Cash cost per tonne milled is a non-IFRS financial measure. Cash costs includeall costs absorbed into inventory, as well as royalties, by-product credits,and production taxes, and exclude capitalised production stripping costs,inventory purchase accounting adjustments, unrealised gains/losses fromnon-hedge currency and commodity contracts, depreciation and amortisation andcorporate social responsibility charges. Cash cost is calculated net ofco-product revenue. Cash costs per tonne milled are calculated by dividing theaggregate of these costs by total tonnes milled. EBITDA is a non-IFRS financial measure. Acacia calculates EBITDA as net profitor 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 beconsidered in isolation or as a substitute for measures of performance preparedin accordance with IFRS. EBITDA excludes the impact of cash costs of financingactivities and taxes, and the effects of changes in operating working capitalbalances, and therefore is not necessarily indicative of operating profit orcash flow from operations as determined under IFRS. Other companies maycalculate EBITDA differently. EBIT is a non-IFRS financial measure and reflects EBITDA adjusted fordepreciation and amortisation and goodwill impairment charges. Mining statistical information The following describes certain line items used in the Acacia Group'sdiscussion of key performance indicators: Open pit material mined - measures in tonnes the total amount of open pit oreand waste mined. Underground ore tonnes hoisted - measures in tonnes the total amount ofunderground ore mined and hoisted. Total tonnes mined includes open pit material plus underground ore tonneshoisted. 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 throughthe mill. Head grade - measures the metal content of mined ore going into a mill forprocessing. Milled recovery - measures the proportion of valuable metal physicallyrecovered in the processing of ore. It is generally stated as a percentage ofthe metal recovered compared to the total metal originally present.