ACA.L Regulatory News (ACA)

AFRICAN BARRICK GOLD 30 October 2013 Results for the three months ended 30 September 2013 (Unaudited) Based on IFRS and expressed in US Dollars (US$) African Barrick Gold plc ("ABG'') reports third quarter results "I am delighted to present a strong set of operational results in my firstreport as CEO of ABG. The continued focus on operational delivery and theimplementation of cost saving programmes across the group has resulted in ourstrongest quarter this year", said Brad Gordon, Chief Executive Officer ofAfrican Barrick Gold. "I am impressed with the quality of our assets, theinitiatives implemented to date and the people at our operations. We need tocontinue and deepen this operational discipline to ensure that we achievesustainable cash generation. We now expect to exceed the upper end of theproduction guidance range of 600,000 ounces for 2013, with the resultant cashcost per ounce being below the lower end of guidance of US$925 per ounce sold." Third Quarter Highlights ABG reports net earnings of US$17.8 million (US4.3 cents per share) withadjusted net earnings2 of US$39.1 million (US9.5 cents per share), afterone-off adjustments mainly relating to the Tulawaka closure and the OperationalReview. Operational cash flow was US$39.9 million. Other significant highlights include: Q3 gold production1 of 164,719 ounces up 11% on Q3 2012 Cash costs2 of US$730 per ounce sold, 28% lower than Q3 2012 Revenue of US$221.1 million and EBITDA of US$64.8 million All-in sustaining costs2 of US$1,275 per ounce sold, down 25% on Q3 2012 Cash balance of US$289 million as at 30 September 2013 On track to deliver target of over US$100 million in cost reductions by the endof 2013 Bulyanhulu CIL Expansion project remains on track for first production in Q12014 Operational Review Update We have continued to make good progress on the implementation of theOperational Review and have continued to see a strong downward trend in bothour cash costs and all-in sustaining costs, which were down 17% and 7%respectively on Q2 2013 and 28% and 25% respectively on Q3 2012. A revampedmanagement team has been appointed to accelerate and deepen the OperationalReview and ensure a continued focus on effectively managing our cost base goingforward. Progress has been made in each of the below areas: Operating cost reductions - Of the US$95 million of savings targeted, we remainon track to achieve the planned 30% in 2013, with US$21 million saved to dateon an annualised basis. Major savings to date have been in maintenance, campservices, consumables and security. Capital discipline - Achieved US$27 million of sustaining capital savings todate against the same period in 2012 and continue to expect to achieve thebalance of the previously communicated saving of US$50 million by year end. Organisational structure - Significant changes to staffing structures andlevels resulting in a reduction of 27% of international employees year to dateand a reduction of 37% in contractors on site. Corporate overhead cost reductions - To date, savings of US$12 million havebeen realised through simplifying the corporate structure and reducing thesupport offices. A further saving of US$3 million is expected to be achieved inQ4 2013, in line with the overall target of $15 million for 2013. Exploration - We have so far achieved US$18 million of our targeted savings ofUS$25 million for 2013. Mine planning deliverability - Following the optimisation of the Buzwagi mineplan last quarter, we have decided to defer Gokona Cut 3 at North Mara,representing 628koz of the mine's reported reserves, while we finalise thefeasibility study into the alternative of mining out this reserve andadditional identified resource through an underground operation. Key statistics Three months ended 30 Nine months ended 30 September September (Unaudited) 2013 20124 2013 20124 Tonnes mined (thousands of tonnes) 13,388 12,992 42,530 34,359 Ore tonnes mined (thousands of tonnes) 1,697 1,514 5,099 4,804 Ore tonnes processed (thousands of tonnes) 2,114 1,890 6,162 5,632 Process recovery rate (percent) 88.3% 89.5% 88.6% 87.6% Head grade (grams per tonne) 2.7 2.7 2.7 2.8 Attributable gold production (ounces)1 164,719 147,786 476,557 445,528 Attributable gold sold (ounces)1 161,631 147,026 481,565 449,667 Copper production (thousands of pounds) 2,838 2,483 8,422 8,609 Copper sold (thousands of pounds) 2,448 2,325 8,561 8,284 Cash cost per tonne milled (US$)2 56 79 66 75 Per ounce data (US$) Average spot gold price3 1,326 1,652 1,456 1,652 Average realised gold price2 1,310 1,688 1,423 1,657 Total cash cost2 730 1,012 845 934 All-in sustaining cost2 1,275 1,709 1,429 1,563 Average realised copper price (US$/pound) 3.20 3.88 3.22 3.63 Financial results Three months ended 30 Nine months ended 30 September September (Unaudited) 2013 20124 2013 20124 (US$'000) Revenue 221,145 264,927 720,897 799,395 Cost of sales (158,650) (205,231) (573,534) (579,968) Gross profit 62,495 59,696 147,363 219,427 Corporate administration5 (9,593) (13,278) (24,502) (38,264) Exploration and evaluation costs (3,449) (7,314) (11,003) (17,698) Corporate social responsibility expenses (3,243) (2,963) (10,162) (9,713) Impairment charges - - (927,690) - Other charges (12,625) (418) (34,717) (4,693) Profit/ (loss) before net finance cost 33,585 35,723 (860,711) 149,059 Finance income 81 595 1,086 1,674 Finance expense5 (2,417) (2,427) (7,192) (7,740) Profit/ (loss) before taxation 31,249 33,891 (866,817) 142,993 Tax (expense)/ credit (15,921) (10,436) 168,727 (45,458) Net profit / (loss) for the period 15,328 23,455 (698,090) 97,535 Attributed to: - Non-controlling interests (2,502) (367) (14,690) 3 - Owners of the parent (net earnings/(loss)) 17,830 23,822 (683,400) 97,532 Other Financial information Three months Nine months ended ended 30 30 September September (Unaudited, in US$'000 unless otherwise stated) 2013 20124 2013 20124 EBITDA2,5 64,769 76,726 195,541 261,143 Adjusted EBITDA2,5 77,508 76,726 217,414 261,143 Net earnings / (loss) 17,830 23,822 (683,400) 97,532 Earnings / (loss) per share (EPS) (cents) 4.3 5.8 (166.6) 23.8 Adjusted net earnings2 39,052 23,822 78,386 97,532 Adjusted net earnings per share (AEPS) (cents)2 9.5 5.8 19.1 23.8 Dividend per share (cents) - - 1.0 4.0 Cash and cash equivalents 288,663 452,447 288,663 452,447 Cash generated from operating activities 39,851 45,259 138,922 172,361 Operating cash flow per share (cents)2 9.7 11.0 33.9 42.0 Capital expenditure6 83,040 82,087 269,968 223,786 Draw down of long term debt (Borrowings) 30,000 - 110,000 - 1 Production and sold ounces reflect equity ounces which exclude 30% ofTulawaka's production and sales base. 2Average realised gold price, total cash cost per ounce, all-in sustaining costper ounce, cash cost per tonne milled, EBITDA, adjusted EBITDA, adjusted netearnings, adjusted net earnings per share and operating cash flow per share arenon-IFRS financial performance measures with no standard meaning under IFRS.Refer to "Non IFRS measures"' on page 11 for definitions. 3Reflect the London PM fix price. 4Restated for the impact of capitalised stripping due to the adoption of IFRIC20. 5 Three and nine months ended 30 September 2012 restated to reclassify bankcharges from corporate administration to finance expense. 6Includes non-cash reclamation asset adjustments and finance lease purchases in2012. Third Quarter Review During the third quarter we saw continued strong performance at both Buzwagiand North Mara with production up 47% and 28% respectively on Q3 2012. AtBulyanhulu, we continued to progress the recovery plan, delivering productionof 52,126 ounces, broadly in line Q2 2013, but 8% down on Q3 2012 due to lowerthroughput. Buzwagi continued to show strong year on year improvements on all key operatingmetrics as it began to implement the new mine plan. Head grade was 17% higherthan in Q3 2012 due to the impact of the re-engineered mine plan focusing onhigher return areas. When combined with mill throughput, which was up 31% on Q32012, we achieved production of 44,408 ounces, a 47% increase on Q3 2012. At North Mara, mining continued from higher grade zones in the Gokona pitresulting in a head grade of 3.4 grams per tonne (g/t). Increased throughputoffset a decrease in mill recovery rates to 86.9%, predominantly as a result ofinconsistency experienced in the oxygen plant during the quarter. As a result,production for the quarter amounted to 67,895 ounces, an increase of 28% on Q32012. At Bulyanhulu, reduced equipment availability and access to stopes resulted ina 3% decrease in ore tonnes hoisted, which, combined with plant maintenanceresulted in throughput being 9% lower than in Q3 2012. This resulted inproduction of 52,126 ounces for the quarter, an 8% decrease on Q3 2012. Total tonnes mined amounted to 13.4 million tonnes, an increase of 3% on Q32012, driven by increased mining rates at North Mara, which was partiallyoffset by lower mining rates at Buzwagi due to the change in mine plan. Ore tonnes mined of 1.7 million tonnes were 12% higher than in Q3 2012 as aresult of the increase in ore tonnes mined at North Mara and at Buzwagi. Ore tonnes processed amounted to 2.1 million tonnes, an improvement of 12% onQ3 2012. Increased throughput at Buzwagi, achieved as a result of a stablepower supply and process plant improvements, was partially offset by lowerthroughput at Tulawaka due to the closure of the site, and at Bulyanhulu due toinsufficient ore from underground. Group head grade for the quarter of 2.7 g/t was in line with Q3 2012. Theincreased grade from Gokona at North Mara was offset by an increased proportionof group throughput being at Buzwagi at a lower grade. Total cash costs of US$730 per ounce sold were 28% lower than Q3 2012. Thedecrease was primarily due to decreased labour costs as a result of theOperational Review (US$48/oz), lower site G&A costs (US$29/oz) and lowermaintenance costs, achieved as a result of the reduction in mining activity atBuzwagi and our ongoing general focus on cost cutting and improved maintenancescheduling (US$21/oz). In addition, cash costs benefitted from increasedcapitalised stripping and a drawdown of low cost inventories (US$99/oz). All-in sustaining cost per ounce sold ("AISC") of US$1,275 was 25% lower thanQ3 2012, driven by lower cash costs, corporate administration costs,exploration costs and sustaining capital expenditures combined with a higherproduction base. This was partially offset by the increase in capitaliseddevelopment expenditures. Cash cost per tonne milled of US$56 decreased by 29% on Q3 2012 (US$79 pertonne), primarily as a result of the above factors and the increased groupthroughput. Gold sales amounted to 161,631 ounces, an increase of 10% on Q3 2012, and 2%lower than production for the quarter due to the timing of shipments at quarterend. Copper production for the quarter of 2.8 million pounds was 14% higher than inQ3 2012. Increased production at Buzwagi was partially offset by lowerproduction at Bulyanhulu. Revenue of US$221.1 million was 17% lower than Q3 2012 as the increase in goldsales achieved for the quarter was more than offset by a 22% decrease in theaverage realised gold price (US$1,310 per ounce sold for Q3 2013 when comparedto US$1,688 per ounce sold in Q3 2012). Realised prices were below the averagegold price for the quarter due to sales being skewed towards the end of thequarter when the gold price was lower. EBITDA of US$64.8 million was 16% lower than Q3 2012 as a result of increasedother charges of US$12.2 million due to the allocation of non-operationalTulawaka costs, including retrenchments, costs associated with the OperationalReview and increased unrealised losses on currency hedges not qualifying forhedge accounting. Adjusted EBITDA of US$77.5 million was in line with Q3 2012. Capital expenditure for the quarter amounted to US$83.0 million, in line withthat of Q3 2012 (US$82.1 million). Key capital expenditures included theBulyanhulu CIL Expansion project (US$18.1 million), capitalised stripping atBuzwagi and North Mara (US$31.0 million), capitalised underground developmentat Bulyanhulu (US$10.6 million) and group sustaining capital investments inmining equipment, plant and tailings and infrastructure of US$19.4 million. Other developments Operational Review We have made good progress on the implementation of the US$185 million of costsavings outlined in the Operational Review in July and remain on track todeliver our target of over US$100 million in cost reductions by the end of2013. The delivery on the cost savings is highlighted by the consistentreduction in our AISC over the year to date whilst delivering strongproduction. Progress against each of the key areas of the Operational Review isdetailed below: 1. Operating cost reductions - US$95 million Of the US$95 million of savings targeted, we remain on track to achieve theplanned run rate of 30% by the end of 2013, with US$21 million savings achievedto date on an annualised basis. The balance of the US$95 million is expected tobe achieved by the end of 2014. Key highlights in each operating cost area are: Labour structure and controls - reduction of up to 20% on 2012 Reduction of international workers at Buzwagi from 148 to 51 at as the end ofQ3 2013 Across the group we have seen a reduction of 37% in contractors on site year todate Procurement - reduction of 5-10% on 2012 Renegotiation of a consumable contract which is expected to realise annualsavings in excess of US$1.2 million Improved pricing standardisation across sites Maintenance - reduction of 5-10% on 2012 Year to date saving of 7% in process plant maintenance due to improvedscheduling Reduction in the reliance on original equipment manufacturers for non-criticalspares Aviation, Camp Services, Travel, Vehicles and Administration - reduction of30-40% on 2012 Reduction of inter-site aviation schedule from 6 days to 5 days a week Improved cost control in respect of travel bookings as well as camp and mealadministration Consumables - reduction of 5-10% on 2012 Implementation of short interval controls in the CIL and detoxification plantsto reduce cyanide usage Feasibility study for an in-house tyre repair workshop near completion Contract Management and External Services - reduction of 5-10% on 2012 Renegotiation of several major service contracts concluded which will result inannual savings of US$6.8 million Revised contract administration procedures to improve rates and contractorperformance Security - reduction of 15-20% on 2012 33% reduction in number of international employees within the security function In-sourcing of related services and a reduction of contractors on site 2. Capital discipline - US$50 million Achieved US$27 million of sustaining capital savings to date against the sameperiod in 2012 and continue to expect to achieve the balance of the previouslycommunicated saving of US$50 million by year end. 3. Corporate overhead cost reductions - US$15 million Progress has been made on the simplification of the corporate structure and thereduction in size of our support offices, with US$12 million of the plannedsavings made year to date. The number of staff in our corporate offices hasalready been reduced by 30% which has the further benefit of reducing traveland expense costs. We remain on track to complete the full savings of US$15million by the end of 2013. 4. Exploration - US$25 million As previously announced we have scaled back our exploration activities in 2013,resulting in a targeted cost saving of US$25 million when compared to 2012.Year to date we have achieved a saving of approximately US$18 million as wehave focused our exploration programme on potential high return programmes atBulyanhulu and on two targets in the North Mara region. In Kenya we areundertaking extensive low cost sampling and testing of anomalies in order toprepare for future programmes. 5. Mine planning deliverability In addition to the review of our operating costs, we are reviewing our life ofmine plans at each operation and the options available to ABG to enhance cashflow generation in the near term. At Buzwagi we have updated the life of mineplan to focus on cash flow generation and are currently mining to that plan. At North Mara, we have decided to defer Gokona Cut 3, which contains 628koz ofNorth Mara's reserve base, while we finalise the feasibility study into thealternative of mining out this reserve and additional identified resourcethrough an underground operation. We expect to complete this study by themiddle of 2014. At Bulyanhulu, the first stage in the future development of the mine, the CILExpansion, remains on budget and on time for first production in Q1 2014. Aspart of the review of the life of mine of the underground we are assessing thetiming of the Upper East Acceleration and have commenced a deep drillingexploration campaign to assess potential extension of the mineralisation to theWest of the ore body. Senior Leadership Team changes During the quarter there were a number of management changes designed tostrengthen the leadership team and ensure continued delivery of the OperationalReview. Brad Gordon was appointed Chief Executive Officer in August 2013 andbrings over 30 years of operational experience. Since his appointment Brad hasalso taken day-to-day oversight of operations following the departure of theformer COO, Marco Zolezzi. A replacement as COO will be appointed in duecourse. Andrew Wray, formerly Head of Corporate Development and InvestorRelations was also appointed as Chief Financial Officer (CFO) in September2013. Jaco Maritz, who had been Acting CFO since March 2013, has resumed hisresponsibilities as Vice President, Finance. Tulawaka Closure Process At Tulawaka, we continued with the closure process of the mine. This resultedin incidental production of 289 ounces for the quarter as the process plant wasclosed. We are finalising discussions with the Government on the ultimatefuture use of the site, and hope to conclude these by the end of the year. Taxation During Q3 2013 working capital continued to be adversely affected by the buildup in the indirect tax receivable which has been driven by the abolition of VATRelief in Q4 2012 in contravention of our Mineral Development Agreements.During the quarter the receivable increased by US$22.4 million and the totalindirect tax receivable build up since Q4 2012 amounted to US$98.4 million asat 30 September 2013. Post period end we received a VAT refund of US$4.8million against this amount and will be pursuing further refunds. We have alsoset up an escrow arrangement for VAT Imports in order to address ongoingmonthly payments in order to prevent a further build up of the amount. Wecontinue to discuss a similar agreement for VAT levied on domestic goods whichrepresent approximately 50% of monthly payments. Post period end we received a demand from the Tanzanian Revenue Authorityamounting to US$81 million for payment of with-holding tax on historic offshoredividend payments to shareholders. Management do not believe this is a validdemand and we will vigorously defend our position. Outlook Over the past nine months we have delivered improved performance from ouroperating portfolio as a result of a continued focus on operational deliveryand cost control. We believe we are well positioned to continue the reductionin our all in sustaining costs in the fourth quarter and into 2014. We now expect full year production to exceed the higher end of guidance of600,000 ounces with the resultant cash cost per ounce being below the lower endof guidance of US$925 per ounce sold. African Barrick Gold 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) 207 861 3232 Charlie Vivian Daniel Thöle About ABG ABG is Tanzania's largest gold producer and one of the five largest goldproducers in Africa. We have three producing mines, all located in NorthwestTanzania, and several exploration projects at various stages of development inTanzania and Kenya. We have a high-quality asset base, solid growthopportunities and a clear strategy of optimising, expanding and growing ourbusiness. Maintaining our licence to operate through acting responsibly in relation toour people, the environment and the communities in which we operate is centralto achieving our objectives. ABG is a UK public company with its headquarters in London. We are listed onthe Main Market of the London Stock Exchange under the symbol ABG and have asecondary listing on the Dar es Salaam Stock Exchange. Historically and priorto our initial public offering (IPO), our operations comprised the Tanzaniangold mining business of Barrick Gold Corporation, our majority shareholder. ABGreports in US dollars 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 30 October 2013 at12:00 GMT with the dial-in details as follows: Participant dial in: +44 (0) 203 003 2666 / +1 866 843 4608 Password: ABG A recording of the conference call will be made available on ABG's website,www.africanbarrickgold.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, projects, operations, costs, products andservices, and the Operational Review and statements regarding futureperformance. Forward-looking statements are generally identified by the words"plans," "expects," "anticipates," "believes," "intends," "estimates", "will"and other similar expressions. All forward-looking statements involve a number of risks, uncertainties andother factors, many of which are beyond the control of ABG, which could causeactual results and developments to differ materially from those expressed in,or implied by, the forward-looking statements contained in this report. Factorsthat could cause or contribute to differences between the actual results,performance and achievements of ABG include, but are not limited to, changes ordevelopments in political, economic or business conditions or national or locallegislation or regulation in countries in which ABG conducts or may in thefuture conduct business, industry trends and developments, competition,fluctuations in the spot and forward price of gold and copper or certain othercommodity prices (such as diesel fuel and electricity), currency fluctuations(including the US dollar, South African rand, Kenyan shilling and Tanzanianshilling exchange rates), ABG's ability to successfully integrate acquisitions,ABG's ability to recover its reserves or develop new reserves, including itsability to convert its resources into reserves and its mineral potential intoresources or reserves, and to process its mineral reserves successfully and ina timely manner, ABG's ability to complete land acquisitions required tosupport its mining activities, operational or technical difficulties which mayoccur in the context of mining activities, delays and technical challengesassociated with the completion of projects , risk of trespass, theft andvandalism, changes in ABG's business strategy including, without limitation,ABG's successful implementation of the Operational Review, as well as risks andhazards associated with the business of mineral exploration, development,mining and production and risks and factors affecting the gold mining industrygenerally . Although ABG's management believes that the expectations reflectedin such forward-looking statements are reasonable, ABG cannot give assurancesthat such statements will prove to be correct. Accordingly, investors shouldnot place reliance on forward-looking statements contained in this report. Anyforward-looking statements in this report only reflect information available atthe time of preparation. Subject to the requirements of the Disclosure andTransparency Rules and the Listing Rules or applicable law, ABG explicitlydisclaims any obligation or undertaking publicly to update or revise anyforward-looking statements in this report, whether as a result of newinformation, future events, changes in expectations or circumstances, orotherwise. Nothing in this report should be construed as a profit forecast orestimate and no statement made should be interpreted to mean that ABG's profitsor earnings per share for any future period will necessarily match or exceedthe historical published profits or earnings per share of ABG. Bulyanhulu Key statistics Three months Nine months ended ended 30 September 30 September (Unaudited) 2013 2012 2013 2012 Underground ore tonnes hoisted Kt 232 240 650 746 Ore milled Kt 228 250 642 782 Head grade g/t 7.8 7.8 7.7 8.3 Mill recovery % 90.5% 90.6% 90.8% 90.7% Ounces produced oz 52,126 56,912 145,100 188,499 Ounces sold oz 50,767 55,687 138,569 189,104 Cash cost per ounce sold US$/oz 769 910 936 762 AISC per ounce sold US$/oz 1,183 1,425 1,437 1,163 Cash cost per tonne milled US$/t 171 202 202 184 Copper production Klbs 1,269 1,414 3,507 4,897 Copper sold Klbs 1,169 1,349 3,204 4,602 Capital expenditure US$('000) 35,969 26,924 118,830 67,163 - Sustaining capital US$('000) 5,314 9,859 20,860 24,918 - Capitalised development US$('000) 10,576 11,244 34,678 33,370 - Expansionary capital US$('000) 20,910 4,799 73,331 5,967 36,800 25,902 128,869 64,255 - Non-cash reclamation asset adjustments US$('000) (831) 1,022 (10,039) 2,908 Operating performance Bulyanhulu delivered solid performance as it progressed against the recoveryplan, producing 52,126 ounces during the quarter, in line with Q2 2013, anddown 8% on Q3 2012. Ore mined remained constrained due to reduced equipmentavailability and delays in accessing mining faces. Plant maintenance led toincreased downtime, which when combined with the reduced ore hoisted resultedin throughput being 9% below that achieved in Q3 2012. The previous delays inpaste-fill activity resulted in limited access to high grade stopes during theearly part of the quarter, although the situation improved as the quarterprogressed. Copper production for the quarter of 1.3 million pounds was 10% lower than inQ3 2012, primarily due to a lower copper grade and lower throughput. Cash costs per ounce sold for the quarter of US$769 were 15% lower than in Q32012 (US$910 per ounce), driven by lower maintenance costs, lower contractedservices, lower labour costs, and lower cost overheads. AISC per ounce sold of US$1,183 per ounce sold was 17% below Q3 2012 as aresult of the lower cash cost base and lower capitalised development costs. Cash costs per tonne milled decreased to US$171 in Q3 2013 (US$202 in Q2 2012)as a result of the lower costs as discussed above. Capital expenditure for the quarter of US$36.0 million was US$9.0 millionhigher than in Q3 2012 (US$26.9 million) primarily as a result of theexpansionary capital spend on the CIL Expansion project (US$18.1 million) andfinal payments on long lead items ordered in Q4 2012 for the Upper East project(US$2.5 million). Included in capital expenditure is a negative non-cashreclamation adjustment of US$0.8 million. Buzwagi Key statistics Three months Nine months ended ended 30 September 30 September (Unaudited) 2013 2012# 2013 2012# Tonnes mined Kt 7,628 8,664 24,933 20,655 Ore tonnes mined Kt 1,001 800 2,502 2,908 Ore milled Kt 1,165 888 3,455 2,653 Head grade g/t 1.4 1.2 1.3 1.4 Mill recovery % 87.3% 88.3% 87.9% 85.2% Ounces produced oz 44,408 30,211 130,154 100,942 Ounces sold oz 40,599 32,809 136,966 104,058 Cash cost per ounce sold US$/oz 1,012 1,264 946 1,172 AISC per ounce sold US$/oz 1,436 2,369 1,582 1,927 Cash cost per tonne milled US$/t 35 47 38 46 Copper production Klbs 1,569 1,069 4,915 3,713 Copper sold Klbs 1,279 975 5,357 3,683 Capital expenditure* US$('000) 14,506 31,982 69,692 68,507 - Sustaining capital US$('000) 6,623 14,716 27,280 36,548 - Capitalised development US$('000) 7,986 16,267 49,324 28,963 14,609 30,983 76,604 65,511 - Non-cash reclamation asset adjustments US$('000) (103) 999 (6,912) 2,996 #Restated for the impact of capitalised stripping due to the adoption of IFRIC20. Operating performance As announced in July, we have re-engineered the mine plan at Buzwagi tosignificantly reduce the AISC of the mine and to enable positive free cashgeneration. We began to implement the new plan during Q3 2013 and as expectedhave seen a positive impact on the cost base. Total tonnes mined of 7.6 million tonnes were 10% lower than in Q2 2013 and 12%lower than in Q3 2012 as a result of the change in mine plan. Given the focuson higher return areas under the new plan, ore tonnes mined were 25% higherthan in both Q2 2013 and Q3 2012. During Q3 2013 the mill continued to operate above the nameplate capacity andsaw a 31% increase in tonnes milled over Q3 2012. During the quarter mill feedwas a blend of mined ore and lower grade stockpiles resulting in a blendedgrade of 1.4 g/t, which was 17% higher than in Q3 2012. As planned, the millcontinues to operate largely on self generated power in order to mitigate theinstability of grid power. As a result of both the improved throughput and grade, production of 44,408ounces was 47% higher than in Q3 2012. Gold ounces sold during the quartertrailed production by 9% due to the timing of production and concentrateshipments leaving site. Copper production for the quarter of 1.6 million pounds was 47% aboveproduction in Q3 2012. This was primarily due to the increased throughput. Cash costs for the quarter were US$1,012 per ounce sold compared to US$1,264 inQ3 2012. Cash costs have been positively affected by the increased productionbase, lower contracted services costs due to the lower mining activity and therenegotiation of contracts resulting in lower rates and a reduction in labourcosts due to a reduction in mainly international employees. AISC per ounce sold of US$1,436 per ounce decreased by 12% on Q2 2013 and 39%on Q3 2012. This was due to the overall lower cost base and decreasedcapitalised stripping costs and as a result of the change in mine plan. Cashcost per tonne milled of US$35 was 26% below Q3 2012 due to increasedthroughput, combined with lower direct mining costs. Capital expenditure for the quarter of US$14.5 million was 55% lower than in Q32012, driven by lower sustaining capital and capitalised stripping costs as aresult of the new mine plan. North Mara Key statistics Three months Nine months ended ended 30 September 30 September (Unaudited) 2013 2012# 2013 2012# Tonnes mined Kt 5,528 4,057 16,923 12,603 Ore tonnes mined Kt 464 443 1,923 1,016 Ore milled Kt 720 709 2,000 2,046 Head grade g/t 3.4 2.6 3.5 2.4 Mill recovery % 86.9% 88.3% 87.1% 83.9% Ounces produced oz 67,895 53,120 196,373 129,996 Ounces sold oz 69,695 50,200 199,895 129,800 Cash cost per ounce sold US$/oz 532 912 667 955 AISC per ounce sold US$/oz 1,199 1,517 1,274 1,733 Cash cost per tonne milled US$/t 52 65 67 61 Capital expenditure* US$('000) 33,073 13,105 80,506 61,059 - Sustaining capital US$('000) 10,862 9,405 34,824 30,583 - Capitalised development US$('000) 23,026 3,218 51,943 24,184 - Expansionary capital US$('000) - - 504 4,557 33,888 12,623 87,271 59,324 - Non-cash reclamation asset adjustments US$('000) (815) 482 (6,765) 1,735 # Restated for the impact of capitalised stripping due to the adoption of IFRIC20. Operating performance North Mara continued its strong performance from H1 2013, and delivered goldproduction of 67,895 ounces for the quarter, an increase of 6% on Q2 2013 and28% on Q3 2012. Gold ounces sold amounted to 69,695 ounces for the quarter,exceeding production by 3% as a result of the sale of inventory on hand at theend of Q2 2013. Positive reconciliations from grade control drilling continued during thequarter which resulted in reduced ore tonnes mined, but an increase in minedgrade. Head grade of 3.4 g/t remained 31% above Q3 2012, but was marginallybelow Q2 2013 due to the blending of lower grade stockpiles. We expect to see areduction in the grade of ore mined and consequently in head grades towards theend of the year and into Q1 2014. Throughput was 2% higher than in Q3 2012 driven by improved availability in themill. Recoveries of 86.9% were 2% lower than in Q3 2012, primarily as a resultof instability experienced in the oxygen plant during the quarter. In Q4 2013we will undertake a planned major shutdown of the crusher which will result intwo weeks of mill downtime. Total tonnes mined for the quarter amounted to 5.5 million tonnes, 36% higherthan in Q3 2012. Ore tonnes mined of 464,000 were marginally higher than in Q32012 as a result of the waste stripping programme undertaken in 2012 andchanges to the mine plan as a result of the grade control model. Cash costs were US$532 per ounce sold compared to US$912 in Q3 2012. Thedecrease in cash costs per ounce was driven by the increased production baseand increased capitalised stripping. This was slightly offset by increasedmaintenance and energy costs given increased mining and processing activities. AISC per ounce of US$1,199 was 21% lower than in Q3 2012 as a result of thecombined effects of lower cash costs and the increase in ounces produced,slightly offset by the increase in capitalised striping costs. As a result ofthe above and combined with the increased throughput, cash cost per tonnemilled of US$52 was 20% lower than in Q3 2012. Capital expenditure for the quarter of US$33.1 million was 152% higher than inQ3 2012. Key capital expenditure included capitalised stripping (US$23.0million) and investments in mine equipment, tailings and infrastructure (US$8.8million). As part of the ongoing life of mine review, we have deferred the mining ofGokona Cut 3 while we finalise the feasibility study into the alternative ofmining out this reserve and additional identified resource through anunderground operation. We expect to complete this study by the middle of 2014.This option would mine the majority of the 628koz of reserve contained in thecutback, which was not scheduled to provide meaningful production until 2017,and would significantly reduce life of mine land requirements. We haverecommenced mining in the Nyabirama pit having been granted a permit toundertake controlled blasting and made further progress on land acquisitionsaround the Gokona pit, spending US$6.7 million on land during the quarter. We have continued to progress the lifting of the Environmental Protection Order("EPO") during the quarter and in October commenced a community educationprogramme which is the last step ahead of the granting of discharge permits. Exploration and Development Update As previously announced as part of the Operational Review we have scaled backour exploration and evaluation budget for 2013 to US$21 million, which is areduction of 54% on the 2012 budget (US$46 million). The majority of work thisyear is based around deep drilling at Bulyanhulu and targeted greenfieldsexploration in both Kenya and at Dett-Ochuna and Tagota in Tanzania. We havecontinued to progress the CIL Expansion project at Bulyanhulu and retain theoptionality to progress our other growth projects within the portfolio. Bulyanhulu CIL Expansion Project The Bulyanhulu CIL Expansion project continues to progress well and remains ontrack for first production in Q1 2014. We remain on budget, with US$88.2million spent in total to date on the project, of which US$18.1 million wasincurred in Q3 2013. The project is predominantly funded by a US$142 milliondebt facility of which US$110 million has been drawn down to date. Project focus during Q3 2013 was on the progression of civil work and thecommencement of the construction of the structural steel works. The key focusfor Q4 2013 is to accelerate the steel construction, commence the electrical/instrumentation works and to take timely delivery of the last materials at siterequired for commissioning during Q1 2014. During the quarter we also commenced the first phase of construction of the newtailing storage facility, in order to hold the expanded CIL tailings, asrequired to support the operation of the expanded CIL plant followingcommissioning. Exploration Tanzania Bulyanhulu Deeps West During the quarter we commenced drilling of the first of three deep diamondcore holes west of the Bulyanhulu mine targeting the extension of Reef 1 goldmineralisation. The planned programme is comprised of approximately 20,000metres of diamond core drilling from three parent holes and 25 daughter holesutilising navigational drilling. The holes are testing the extensions of theReef 1 structure from 400 metres to 1,200 metres west of the current Bulyanhuluresource, targeting a new zone and plunge extensions of the Main Zone withinthe mine to depths of between 1.0km and 2.5km vertical. Drilling on this targetcommenced late in Q3 2013 with a total of 718 metres of diamond core drillingcompleted at the end of September. Kenya West Kenya JV Project Exploration programmes in Kenya during Q3 2013 continued to focus on targetgeneration, mapping, soil sampling and rock chip sampling across selectedregional prospects in order to delineate and validate targets for follow upprogrammes. We also commenced a 25,000 metre Aircore drilling programme that istargeting existing priority gold-in-soil anomalies and favourable structuralcorridors beneath transported cover. During the quarter a total of 4,967 soil samples were collected across theKakamega Dome and Lake Zone gold camps on broad (400 metre and 800 metre)spaced grids, and more than 20 new gold-in-soil anomalies have now beendelineated for infill sampling and/or Aircore drilling. Aircore drilling to test existing soil anomalies throughout the Kakamega Domeand Lake Zone gold camps commenced in late Q3 with a total of 28 holescompleted for 482 metres. To date only the target area around the historicRosterman mine has been drilled. The aim of the aircore programme is toestablish camp-scale targets for more advanced stage reverse circulation anddiamond core drill testing during H2 2014. Non IFRS Measures ABG 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 ABG'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 gains and losses on non-hedge derivative contracts; 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, 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. The presentation of these statistics in this manner allows ABG to monitor andmanage those factors that impact production costs on a monthly basis. ABGcalculates cash costs based on its equity interest in production from itsmines. Cash costs per ounce sold are calculated by dividing the aggregate ofthese costs by gold ounces sold. Cash costs and cash costs per ounce sold arecalculated on a consistent basis for the periods presented. 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 costs 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 is presented below: (Unaudited) Three months ended 30 September 2013 Three months ended 30 September 2012 (US$/oz sold) Bulyanhulu North Mara Buzwagi ABG Group Bulyanhulu North Mara Buzwagi ABG Group Cash cost per ounce sold 769 532 1,012 731 910 912 1,264 1,019 Corporate administration 61 33 50 59 107 90 123 88 Rehabilitation 6 22 9 14 11 44 22 28 Mine exploration 3 8 2 6 12 30 7 16 CSR expenses 11 22 3 20 6 24 9 20 Capitalised development 208 330 197 257 202 64 496 216 Sustaining capital 125 252 163 190 177 353 449 330 Attributable to outside interests (2) (9) Total 1,183 1,199 1,436 1,275 1,425 1,517 2,369 1,709 (Unaudited) Nine months ended 30 September 2013 Nine months ended 30 September 2012 (US$/oz sold) Bulyanhulu North Mara Buzwagi ABG Group Bulyanhulu North Mara Buzwagi ABG GroupCash cost per ounce sold 936 667 946 853 762 955 1,172 939 Corporate administration 73 37 53 51 73 88 90 83 Rehabilitation 8 30 18 21 9 48 22 34 Mine exploration 4 13 2 7 7 19 6 10 CSR expenses 7 27 4 21 4 36 8 21 Capitalised development 250 260 360 281 176 186 278 199 Sustaining capital 158 240 199 202 132 400 351 282 Attributable to outside interests (7) (5) Total 1,437 1,274 1,582 1,429 1,163 1,733 1,927 1,563 AISC is intended to provide additional information of what the total sustainingcost for each ounce sold is, taking into account expenditure incurred inaddition to direct mining costs, depreciation and selling costs. EBITDA is a non-IFRS financial measure. ABG calculates EBITDA as net profit orloss 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. Prior year EBITDA was restated by US$0.6 millionto reflect the reclassification of bank charges from corporate administrationcharges to finance expense. Adjusted EBITDA is a non-IFRS financial measure. It is calculated by excludingone-off costs or credits relating to non-routine transactions from EBITDA. Itexcludes other credits and charges that individually or in aggregate, if of asimilar type, are of a nature or size that requires explanation in order toprovide additional insight into the underlying business performance. EBIT is a non-IFRS financial measure and reflects EBITDA adjusted fordepreciation and amortisation and goodwill impairment charges. Adjusted net earnings is a non-IFRS measure. It is calculated by excludingone-off costs or credits relating to non-routine transactions from net profitattributed to owners of the parent. It excludes other credits and charges thatindividually or in aggregate, if of a similar type, are of a nature or sizethat requires explanation in order to provide additional insight into theunderlying business performance. Adjusted net earnings per share is a non-IFRS financial measure and iscalculated by dividing adjusted net earnings by the weighted average number ofOrdinary Shares in issue. 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. ABG calculates cash costs based on its equity interest inproduction from its mines. Cash costs per tonne milled are calculated bydividing the aggregate of these costs by total tonnes milled. Operating cash flow per share is a non-IFRS financial measure and is calculatedby dividing Net cash generated by operating activities by the weighted averagenumber of Ordinary Shares in issue. Mining statistical information The following describes certain line items used in the ABG Group's discussionof 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 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.