ACA.L Regulatory News (ACA)

ACACIA MINING PLC - 3rd Quarter Results

PR Newswire

London, October 20

21 October 2015

Results for the three months ended 30 September 2015 (Unaudited)

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

Acacia Mining plc (“Acacia’’) reports third quarter 2015 results

“As previously communicated, we had a challenging third quarter, with short term issues impacting Bulyanhulu and Buzwagi. Whilst North Mara again performed well, group production of 163,888 ounces was lower than the previous quarter and means we expect to fall short of our original plans for 2015”, said Brad Gordon, Chief Executive Officer of Acacia. “Over the past two years we have made significant changes to the business to lay the foundation for improved and consistent operational delivery. Although Q3 was disappointing, it does not alter our confidence that we are close to completing the turnaround. We have addressed each of the issues that impacted the business in Q3 to ensure they do not re-occur and, importantly, key underlying metrics at Bulyanhulu are on track to sustain a step-up in production in Q4 2015. As announced in early October we now expect to deliver full year production at around the level achieved in 2014 (718,651 ounces), with cash costs and AISC expected to be around 5% above the top of their initial respective guidance ranges of US$695-725 per ounce sold and US$1,050-1,100 per ounce sold for the full year.”

Operational Highlights

Financial Highlights

1 These are non-IFRS measures. Refer to page 10 for definitions

2 EBITDA, net (loss)/earnings, (loss)/earnings per share and cash generated from operating activities include continuing and discontinued operations in 2014

3 Excludes non-cash capital adjustments (reclamation asset adjustments) and includes finance lease purchases

Other Developments

Indirect taxes

The devaluation of the Tanzanian shilling has continued to have a negative effect on our shilling denominated indirect tax receivables. Over the third quarter, the Tanzanian shilling lost a further 6% of its value against the US dollar, in addition to the 17% devaluation over the first half of the year. This resulted in a foreign exchange revaluation loss for the quarter of US$6 million, which impacts EBITDA and earnings.

During the third quarter, we received gross indirect tax refunds of US$18 million from the Government of Tanzania, but saw a net cash outflow of indirect tax of US$10 million, prior to currency adjustments. We continue to engage with the Government on this matter in order to increase the rate of refunds and reduce the outstanding balance. As at 30 September 2015, the outstanding amount relating to the total indirect tax receivable, not covered by the 2011 Memorandum of Settlement, stood at US$57 million.

Earn-in agreement entered into for Nyanzaga

In September 2015, Acacia announced the formation of an earn-in joint venture with OreCorp Limited (“OreCorp”) to progress the Nyanzaga Project (the “Project”) in Tanzania. OreCorp will act as manager of the Project and will be able to earn up to a 25% ownership of the Project through the completion of various work programme milestones over a three year period for an aggregate project investment of US$15 million, including an up-front payment to Acacia of US$1 million which has been received after the period end.

The formation of the earn-in joint venture with OreCorp allows the Project to be reassessed and then progressed through to the completion of a Definitive Feasibility Study (“DFS”) by a dedicated team who have experience in delivering value from large scale projects in Tanzania and across Africa, whilst allowing Acacia the optionality to maintain a 75% stake in the project once it gets to a development decision.

Outlook

As previously announced, several short-term factors negatively affected production at Bulyanhulu and Buzwagi over the third quarter resulting in lower than expected production levels. North Mara performed in line with expectations. We continue to expect a stronger fourth quarter performance, with production increases at all three mines.

With the increase in fourth quarter production, we expect to deliver full year production at around the level achieved in 2014 (718,651 ounces), compared to the initial guidance range of 750,000-800,000 ounces. With respect to cash costs and AISC, we now expect these to be around 5% above the top of their initial respective guidance ranges of US$695-725 per ounce sold and US$1,050-1,100 per ounce sold for the full year.

In light of the lower gold price environment we are redoubling our efforts to further remove costs from the business in order to return to free cash generation. These initiatives will also be incorporated into annual life of mine planning which is currently underway.

Key statistics

Financial results

1 These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to “Non IFRS measures” on page 10 for definitions.

2 Reflect the London PM fix price.

3 Cash cost per tonne milled excluding the reprocessing of tailings at Bulyanhulu amounted to US$69 per tonne for the quarter and US$68 for the nine months ended 30 September 2015.

4 Other charges includes non-operational items including foreign exchange losses of US$7.8 million (US$23.0 million YTD), legal fees of US$1.7 million (US$4.6 million YTD), and unrealised non-hedge derivative losses of US$2.9 million (gains of US$2.7 million YTD).

*Reported process recovery rates and head grade include tailings retreatment at Bulyanhulu. Excluding the impact of the tailings retreatment Q3 and nine months ended 30 September 2015 process recovery would be 89.4% for both the quarter and year to date, with Q3 and nine months ended 30 September 2015 head grade being 2.9g/t and 3.0g/t respectively.

For further information, please visit our website: http://www.acaciamining.com/ or contact:

Brad Gordon, Chief Executive Officer

Andrew Wray, Chief Financial Officer

Giles Blackham, Investor Relations Manager

Daniel Thöle

About Acacia Mining plc

Acacia Mining plc (LSE:ACA), formerly African Barrick Gold, is Tanzania’s largest gold miner and one of the largest producers of gold in Africa. We have three producing mines, all located in Northwest Tanzania: Bulyanhulu, Buzwagi, and North Mara and a portfolio of exploration projects in Tanzania, Kenya, Burkina Faso and Mali.

Our approach is focused on strengthening our three core pillars; our business, our people and our relationships, whilst continuing to invest in our future. Our name change from African Barrick Gold to Acacia reflects a new approach to mining, and an ambition to create a leading African Company.

Acacia is a UK public company headquartered in London. We are listed on the Main Market of the London Stock Exchange with a secondary listing on the Dar es Salaam Stock Exchange. Barrick Gold Corporation remains our majority shareholder. Acacia reports in US dollars and in accordance with IFRS as adopted by the European Union, unless otherwise stated in this report.

Conference call

A conference call will be held for analysts and investors on 21 October 2015 at 9.00am London time.

The access details for the conference call are as follows:

A recording of the conference call will be available on our website http://www.acaciamining.com/ after the call.

FORWARD- LOOKING STATEMENTS

This report includes “forward-looking statements” that express or imply expectations of future events or results. Forward-looking statements are statements that are not historical facts. These statements include, without limitation, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future production, operations, costs, projects, and statements regarding future performance. Forward-looking statements are generally identified by the words “plans,” “expects,” “anticipates,” “believes,” “intends,” “estimates” and other similar expressions.

All forward-looking statements involve a number of risks, uncertainties and other factors, many of which are beyond the control of Acacia, which could cause actual results and developments to differ materially from those expressed in, or implied by, the forward-looking statements contained in this report. Factors that could cause or contribute to differences between the actual results, performance and achievements of Acacia include, but are not limited to, changes or developments in political, economic or business conditions or national or local legislation or regulation in countries in which Acacia conducts - or may in the future conduct - business, industry trends, competition, fluctuations in the spot and forward price of gold or certain other commodity prices (such as copper and diesel), currency fluctuations (including the US dollar, South African rand, Kenyan shilling and Tanzanian shilling exchange rates), Acacia’s ability to successfully integrate acquisitions, Acacia’s ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves, and to process its mineral reserves successfully and in a timely manner, Acacia‘s ability to complete land acquisitions required to support its mining activities, operational or technical difficulties which may occur in the context of mining activities, delays and technical challenges associated with the completion of projects, risk of trespass, theft and vandalism, changes in Acacia‘s business strategy including, the ongoing implementation of operational reviews, as well as risks and hazards associated with the business of mineral exploration, development, mining and production and risks and factors affecting the gold mining industry in general. Although Acacia‘s management believes that the expectations reflected in such forward-looking statements are reasonable, Acacia cannot give assurances that such statements will prove to be correct. Accordingly, investors should not place reliance on forward-looking statements contained in this report.

Any forward-looking statements in this report only reflect information available at the time of preparation. Subject to the requirements of the Disclosure and Transparency Rules and the Listing Rules or applicable law, Acacia explicitly disclaims any obligation or undertaking publicly to update or revise any forward-looking statements in this report, whether as a result of new information, future events or otherwise. Nothing in this report should be construed as a profit forecast or estimate and no statement made should be interpreted to mean that Acacia‘s profits or earnings per share for any future period will necessarily match or exceed the historical published profits or earnings per share of Acacia.

Third Quarter Review

During the third quarter of 2015, we saw disappointing operational performance at Bulyanhulu and Buzwagi leading to group production of 163,888 ounces, a 14% decrease from the same period in 2014, with sales volumes exceeding production by 2% at 167,116 ounces. All-in sustaining costs per ounce sold (“AISC”) increased by 9% to US$1,195 per ounce sold, mainly as a result of the impact of lower production on fixed operational spending and investments in the areas of maintenance and contracted underground development costs incurred to improve future operational performance.

Bulyanhulu saw a 2% decrease in production to 62,188 ounces mainly due to delays in opening new high grade long-hole stopes, which led to reduced head grade and lower ore tonnes mined than planned. A specialist contractor has been brought in to undertake the stope opening process, which will ensure sufficient long-hole stopes are available as we move into Q4 2015. Production attributable to underground mining amounted to 54,804 ounces, 6% lower than in the same period in 2014. Production attributable to reprocessed tailings was 7,384 ounces, 45% higher than the same period in 2014. AISC increased by 2% to US$1,373 per ounce sold driven by increased sustaining capital expenditure and increased contractor services costs related to underground development, in combination with the lower production base.

At North Mara, we continued to deliver against plan, with a step up in underground ore tonnes and grade delivered, with approximately 22,600 contained ounces mined for the quarter compared to 6,800 contained ounces mined in Q2 2015. Overall, North Mara produced 67,738 ounces, a 5% increase from Q3 2014 as a result of increased grade and improved recovery rates, at AISC of US$939 per ounce sold, 7% lower than Q3 2014.

At Buzwagi, gold production of 33,961 ounces for the three months was 46% lower than 2014, driven by the mining of lower than planned grades together with reduced mill throughput as a result of extended crusher downtime in September and an unplanned SAG mill re-line. AISC of US$1,394 per ounce sold was 47% higher than in 2014, mainly as a result of the impact of lower production on the fixed cost base.

Total tonnes mined during the quarter amounted to 10.8 million tonnes, a 2% decrease from Q3 2014, while ore tonnes mined of 2.6 million tonnes were 30% higher than in Q3 2014 due to changes in mine plans driving increased ore tonnes moved, mainly at Buzwagi.

Our cash costs for the quarter were 19% higher than in Q3 2014, and amounted to US$807 per ounce sold. The increase was primarily due to:

Partly offset by:

AISC of US$1,195 per ounce sold for the quarter was 9% higher than in Q3 2014, predominantly due to higher cash costs as described above and increased sustaining capital expenditures which were in part offset by lower capitalised development expenses and lower share based payment expenses.

Cash generated from operating activities for the quarter amounted to US$4 million, US$97 million lower than in 2014 mainly due to lower EBITDA and increased working capital outflows. Working capital outflows of US$21 million for the quarter consisted mainly of a decrease in payables (US$13 million), an increase in metals inventory (US$9 million), cash outflows associated with indirect tax (US$10 million), offset by a decrease in trade receivables (US$8 million).

Capital expenditure for the quarter amounted to US$51.4 million compared to US$81.3 million in 2014, with the decrease mainly driven by planned lower expansionary capital spend and lower capitalised stripping at Buzwagi. Lower capitalised stripping at North Mara was offset by increased capitalised development driven by the investment in the Gokona underground development. Capital expenditure primarily comprised of capitalised development expenditure (US$28.0 million), investment in mobile equipment and component change-outs of US$13.3 million and investment in tailings and infrastructure of US$6.2 million.

Mine Site Review

Bulyanhulu

Key statistics

1These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ‘Non-IFRS measures” on page 10 for definitions.

Operating performance

Gold production for the quarter of 62,188 ounces was 2% lower than the same period in 2014. The reduced output was primarily due to delays in opening new high grade long-hole stopes, which led to reduced head grade and lower ore tonnes mined than planned. A specialist contractor has been brought in to undertake the stope opening process, which will ensure that sufficient long-hole stopes are available as we move into Q4 2015.

Recoveries have been impacted by the lower grade together with instability in the plant caused by power interruptions and contamination of the elution circuit, which have both now largely been resolved. Furthermore, in order to better manage long term recoveries and processing costs we are looking at options to separate the run of mine and the reclaimed tailings streams within the CIL circuit.

Production attributable to underground mining amounted to 54,804 ounces, 6% lower than in the same period in 2014. Production attributable to reprocessed tailings was 7,384 ounces, 45% higher than the same period in 2014 due to increased throughput from the new CIL circuit. Gold sold for the quarter amounted to 64,132 ounces, 3% higher than production due to the sale of opening ounces on hand at the beginning of the quarter. Copper production of 1.5 million pounds for the quarter was in line with Q3 2014.

Cash costs for the quarter of US$836 per ounce sold were 11% higher than the same period in 2014 (US$752). Cash costs were driven by the lower production base, combined with increased costs relating to the use of a development contractor and lower capitalisation of mining costs. These factors were partially offset by lower labour costs due to a lower international employee headcount and the impact of a devaluation of the Tanzanian shilling on local labour costs.

AISC per ounce sold for the quarter of US$1,373 was 2% higher than in Q3 2014 (US$1,350) driven by the higher cash cost described above and increased sustaining capital expenditure mainly relating to investments in equipment, tailings infrastructure and underground ventilation.

Whilst production at Bulyanhulu was disappointing in the quarter, it did not reflect the continuing improvement in the operating environment at the mine. We have maintained the improvements in development rates and long-hole stoping widths over the quarter, with the changed procedures regarding long-hole stope openings leading to improved stope availability towards the end of September. We remain confident that the fourth quarter will see Bulyanhulu demonstrate the benefits from the sustainable underlying operating improvements already made at the mine.

Capital expenditure for the quarter before reclamation adjustments amounted to US$29.7 million, 30% lower than the 2014 expenditure of US$42.4 million, mainly driven by lower expansionary capital spend on the new CIL circuit and lower capitalised development spend, partially offset by increased sustaining spend. Capital expenditure consisted mainly of capitalised underground development costs (US$14.2 million), investments in equipment (US$9.5 million) and investments in tailings and infrastructure (US$3.3 million). The credit in expansionary capital expenditure relates to the reversal of amounts accrued on 2014 expansionary capital projects.

Buzwagi

Key statistics

1These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to “Non-IFRS measures” on page 10 for definitions.

Operating performance

Gold production for the quarter of 33,961 ounces was 46% lower than Q3 2014, as production was impacted by the mining of lower than planned grades together with 11% lower mill throughput as a result of extended crusher downtime in September and an unplanned SAG mill re-line. Gold sold for the quarter amounted to 33,590 ounces, in line with production.

Total tonnes mined for the quarter of 6.5 million tonnes were 4% higher than in Q3 2014. Mining during the quarter was primarily focused on lower grade splay areas within the open pit; however negative grade reconciliations from a higher grade zone, combined with limited flexibility resulting from slower than planned waste movement led to mining below reserve grade for the quarter. The mine focused on additional waste movement in late September which will continue into early Q4 2015 in order to increase access to higher grade areas and lead to a step-up in production. Copper production of 1.5 million pounds for the quarter was 50% lower than in Q3 2014 driven by lower throughput and grades.

Cash costs for the quarter of US$1,197 per ounce sold were 86% higher than in Q3 2014 (US$645). Cash costs were primarily impacted by lower production, lower capitalisation of mining costs given the lower strip ratio and lower co-product revenue due to lower copper sales. This was partially offset by lower energy and fuel costs due to lower oil prices, lower sales related costs due to lower sales volumes and lower labour costs driven by a decrease in international employees and the impact of the devaluation of the Tanzanian shilling on local labour costs.

AISC per ounce sold for the quarter of US$1,394 was 47% higher than in Q3 2014 (US$950). This was mainly driven by the higher cash costs together with the impact of the lower sales volumes, partly offset by the lower capitalised development expenditure as discussed above.

Capital expenditure for the quarter of US$4.1 million before reclamation adjustments was 75% lower than in Q3 2014 (US$16.3 million). This was mainly due to mining taking place in the final stage of the open pit which reduces waste mining and resulted in lower capitalised stripping costs. Key capital expenditure for the quarter consists of component change out costs (US$1.5 million) and investments in tailings and infrastructure of US$1.4 million.

North Mara

Key statistics

1These are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to “Non-IFRS measures” on page 10 for definitions.

Operating performance

Production for the quarter of 67,738 ounces was 5% higher than the prior year period as a result of a 3% higher head grade due to higher grade ore delivered from underground more than offsetting the lower open pit grade from Nyabirama. As expected, mined grade from the underground operation increased from 3.9g/t in Q2 2015 to 6.7g/t in Q3 2015 due to the increased proportion of stoping ore of total underground ore production. We expect this trend to continue into the fourth quarter. Gold ounces sold for the quarter of 69,395 ounces were 2% higher than production, and 13% higher than the prior year due to the higher production base. Open pit mined grade decreased due to an increased proportion of ore being sourced from the lower grade Nyabirama pit.

Cash costs for the quarter of US$591 per ounce sold were 10% lower than Q3 2014 (US$655). Lower fuel costs, lower labour costs driven by the impact of the devaluation of the Tanzanian shilling on local labour costs and the higher production base were partly offset by increased contracted services costs as a result of the ramp-up of the Gokona Underground.

AISC per ounce sold for the quarter of US$939 was 7% lower than in Q3 2014 (US$1,015) primarily due to the impact of increased sales volumes and lower cash costs.

Capital expenditure for the quarter, before reclamation adjustments, of US$17.1 million was 24% lower than in 2014 (US$22.4 million). Key capital expenditure included capitalised stripping costs (US$8.7 million), capitalised underground development costs (US$3.9 million), investment in tailings and infrastructure (US$1.5 million) and component costs (US$2.9 million). In addition, US$0.3 million was spent on land acquisitions primarily around the Nyabirama open pit. Land acquisition costs of US$0.3 million are excluded from the capital expenditure above as they are recognised as long term prepayments, but are included in AISC.

Exploration Review

Tanzania

Bulyanhulu – Near-mine Extensions

In Q3 2015 we continued a programme of diamond drilling and commenced a programme of Aircore reconnaissance drilling testing for new Bulyanhulu-style reef systems and extensions of known vein structures within a 3-4 kilometre radius of the mine to potentially identify new ore sources within trucking distance of the Bulyanhulu processing plant. By the end of Q3, a total of 8 core holes for approximately 2,500 metres of diamond core and 275 Aircore holes for approximately 11,000 metres were completed across four target regions, namely, the Safari, NW Extensions, Nose Zone and Central East targets.

Results of the Aircore drilling and diamond core drilling are expected to be received and compiled in Q4 2015 in order to determine follow-up programmes.

Kenya

West Kenya Joint Venture Projects

During Q3 2015 we commenced a diamond core drilling programme designed to follow up on the positive results from the initial drilling programme on the Liranda Corridor within the Kakamega Dome gold camp. The planned programme consists of nine deeper drill holes for a total of approximately 6,500 metres with the objective of testing for down-plunge and down-dip extensions of previously intersected gold mineralisation within interpreted shoots below 400 metres vertical. The follow-up programme commenced late in Q3 2015 with 3 holes completed at quarter-end, and all holes intersecting multiple zones of silica-sericite-fuchsite-(roscoelite)-pyrite-sphalerite alteration and associated quartz veining, but with full assays not yet received. We expect to complete this phase of the diamond core programme in late Q4 2015.

In the Lake Zone gold camp, we commenced a reverse circulation (RC) drilling programme to test gold-in-soil anomalies and co-incident IP chargeability anomalies at Masumbi-Barding and Yala target areas during late Q3 2015, with results of this phase of drilling expected during Q4 2015.

Additionally, in the Lake Zone gold camp, results from the seven diamond drill holes undertaken during Q2 to test the Kitson target were received during Q3, with positive results including:

A review of Kitson and drilling of Kitson North will be completed over the coming months to test the potential of the Kitson trend.

Burkina Faso

Over the past 12 months Acacia has entered into a number of joint ventures with junior exploration companies in Burkina Faso and now has an interest in over 2,400 square kilometres across the prospective Houndé Belt. The most advanced project is the South Houndé JV, managed by Sarama Resources, where Sarama have previously delineated an inferred resource of 1.5 million ounces at 1.6g/t Au at a 0.8g/t Au cut-off, along a 5.5 kilometre section of two parallel soil anomalies that each extend for more than 10 kilometres.

The third quarter saw limited field activity across all of the projects due to the wet season, but we expect to recommence Aircore and Reverse circulation drilling on the South Houndé JV in November to follow up successful completion of IP geophysical surveys and surface geochemical programmes once access is re-established. Furthermore we will continue the early stage surface geochemical and IP geophysical programmes on the Pinarello, Konkolikan and Central Houndé projects in the fourth quarter.

Mali

Tintinba-Bane Project

In late H1 2015, Acacia signed certain agreements with local Malian entities for the acquisition of equity interests in three exploration licences located within the “Kenieba Inlier” region in Western Mali. The properties lie along the world class Senegal-Mali Shear Zone (SMSZ), which is host to more than 50 million ounces of gold endowment. The properties are ideally located over regional geochemical soil anomalies with a lack of modern exploration.

Due to the wet season planned field based work is scheduled to commence in November 2015 and will focus on surface geochemical programmes and reconnaissance RAB/Aircore/auger drilling.

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. These measures are not in accordance with, or a substitute for, IFRS, and may be different from or inconsistent with non-IFRS financial measures used by other companies. These measures are explained further below.

Average realised gold price per ounce sold is a non-IFRS financial measure which excludes from gold revenue:

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 costs 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.

All-in sustaining cost (AISC) is a non-IFRS financial measure. The measure is in accordance with the World Gold Council’s guidance issued in June 2013. It is calculated by taking cash costs 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:

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 costs per tonne milled are 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:

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.

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

Mining statistical information

The following describes certain line items used in the Acacia Group’s discussion of key performance indicators: