ACA.L Regulatory News (ACA)

AFRICAN BARRICK GOLD 24 April 2014 Results for the three months ended 31 March 2014 (Unaudited) Based on IFRS and expressed in US Dollars (US$) African Barrick Gold plc ("ABG'') reports first quarter 2014 results "We have delivered another strong set of results, with production of 168,375ounces and all-in sustaining costs of US$1,131 per ounce, our sixth successivequarterly reduction in AISC", said Brad Gordon, Chief Executive Officer ofAfrican Barrick Gold. "As a result of our continued cost discipline wegenerated positive cash from the operations during the quarter and continue toexpect to be cash flow positive for the full year. We also continue to makeprogress on our expansion projects with the commencement of commissioning ofthe Bulyanhulu CIL Expansion, approval for an underground portal at North Maraand today's announcement on the approval of the Upper East Zone at Bulyanhuluwhich together will further drive the business forward. We remain on track toachieve our guidance of 650,000-690,000 ounces of gold production at AISC perounce of between US$1,100 and US$1,175." First Quarter Operational Highlights Gold production of 168,375 ounces 18% higher than Q1 2013 Gold sales were 5% below production at 159,384 ounces, but 10% higher than Q12013 Cash costs1,2 of US$756 per ounce sold, 15% lower than Q1 2013 All-in sustaining costs1,2 of US$1,131 per ounce sold, 3% lower than Q4 2013and 28% lower than Q1 2013 Average realised gold price of US$1,303 per ounce was 19% below Q1 2013 Bulyanhulu CIL Expansion project moved into the commissioning phase which willcontinue through Q2 2014 Post quarter end the Board approved the next step in optimising Bulyanhulu withthe acceleration of the Upper East Zone First Quarter Financial Highlights Revenue of US$216 million and EBITDA1,3 of US$65 million were 12% and 21%respectively below Q1 2013 due to the lower average realised gold price in thequarter Net earnings2,3 of US$22.4 million (US5.5 cents per share), up 8% on Q1 2013 Total capital expenditure4 of US$55.7 million was reduced by 47% from Q1 2013 Generated cash flow from operations of US$13.3 million after sustaining capital Cash position of US$254 million as at 31 March 2014 Three months ended Year ended 31 March 31 December %(Unaudited) 2014 20132 change 20132 Gold Production (ounces) 168,375 142,759 18% 637,002 Gold Sold (ounces) 159,384 144,277 10% 643,597 Cash cost (US$/ounce)1 756 893 -15% 812 AISC (US$/ounce)1 1,131 1,577 -28% 1,346 Average realised gold price (US$/ounce)1 1,303 1,610 -19% 1,377 (in US$'000) Revenue 216,287 245,460 -12% 929,004 EBITDA1,3 64,731 81,943 -21% 240,407 Net earnings/(loss)3 22,410 20,716 8% (781,101) Basic earnings/(loss) per share (EPS) (cents)3 5.5 5.1 8% (190.4) Cash generated from operating activities 50,726 57,326 -12% 187,115 Capital expenditure4 55,780 105,709 -47% 385,069 1 Cash costs per ounce sold, all-in sustaining cost per ounce sold (AISC) andEBITDA are non-IFRS measures. Refer to page 11 for definitions 2 2013 comparative amounts have been restated to exclude Tulawaka 3 EBITDA and net earnings consist of earnings from both continuing anddiscontinued operations 4 Excludes non-cash reclamation asset adjustments and includes finance leasepurchases Operational Review Our continued delivery on the cost saving targets set out at the start of theOperational Review is highlighted by a further reduction of 3% in AISC over thefirst quarter of 2014 (28% reduction year on year) and improved cash flowgeneration from our sustaining operations quarter on quarter supported by astrong production profile. We remain committed and on track to deliver againstthe US$185 million cost saving target as previously set out and reflected inour AISC guidance. We are progressing the ongoing review in our core miningareas, and we believe that this will deliver further efficiencies and costsavings throughout 2014 and beyond. Divestment of Tulawaka In February, we announced the completion of the transfer of Tulawaka andcertain exploration licences to STAMICO, the Tanzanian state mining company. Aspreviously announced STAMICO took ownership and management of therehabilitation fund established as part of the closure plan for the mine, inreturn for the assumption of all remaining past and future closure andrehabilitation liabilities for Tulawaka, and has indemnified the other partiesto the agreement in relation to these liabilities. As a result ABG transferredthe balance of the rehabilitation fund to STAMICO, less the transactionconsideration and other closing adjustments, which equated to a cash payment ofUS$11.6 million. Included in the net cash payment is a consideration receivedfrom STAMICO of US$4.5 million for assets relating to the operation. After nonoperational costs incurred in January and February and other closingadjustments, this resulted in a realised gain of US$1.3 million included inother charges and a total cash outflow during the quarter of US$15.9 million. Safety On 25 March 2014, Emmanuel Mrutu, one of our underground employees sadly passedaway as a result of injuries sustained following a fall-of-ground incident atBulyanhulu. After ceasing operations for a 24 hour period, we have ongoinginternal and external investigations into this tragic incident in order tomitigate any reoccurrence in future. Ensuring the safety of all our employeesis paramount, and we have continuously improved our safety performance at allof our operations over the past few years. In this regard, we have commissioneda behavioural safety expert to further enhance our safety processes. Barrick Gold Corporation Shareholding On 11 March 2014 Barrick Gold Corporation ("Barrick"), ABG's majorityshareholder, completed the sale of 41 million shares representing 10% of ABG'sissued share capital through a placement with a number of institutionalinvestors. This placement was consistent with Barrick's ongoing portfoliooptimisation strategy and has significantly increased ABG's free float. Aftercompletion of the transaction, Barrick's holding in ABG is 63.9%. At the sametime, our index weighting calculated by FTSE has increased to 37% from 27%. Bulyanhulu Upper East As announced today in a separate release, the Board has approved the next stepin the optimisation of Bulyanhulu through the acceleration of mining from theUpper East Zone. The development of this area will require additional 2014capital of approximately US$15 million, with initial production from the zoneexpected within 3 months. The area is expected to produce 1.7 million ounces ofgold, averaging 60,000 ounces per annum over a life in excess of 25 years atall-in sustaining costs of below our target run rate for Bulyanhulu foryear-end 2015 of US$900 per ounce. Gokona Underground As part of the feasibility study into the potential to mine Gokona Cut 3 via anunderground operation, the Board approved the development of an explorationportal in the existing open pit. The portal will provide the opportunity todevelop a better understanding of the ore body, initial access to ore anddrilling access to the deeper extensions of the ore body. Final geotechnicalwork is underway to decide the location of the portal with constructionexpected to commence in Q3 2014. The total cost of the portal is expected to beunder US$10 million, and this cost is expected to be partially offset byrevenue from ore produced as part of the feasibility test work. Indirect Tax Receivables We are continuing to make progress with respect to the build-up of VAT and sawnet refunds of US$10 million during the quarter. The escrow account relating toVAT on imports continues to work well, and we continue discussions with respectto implementing a similar mechanism for VAT on domestic goods and services. Asat 31 March 2014, the outstanding amount relating to the total indirect taxreceivable stood at US$85 million. Key statistics - restated to reflect Tulawaka as a discontinued operation Three months Year ended 31 ended 31 March December (Unaudited) 2014 20133 20133 Tonnes mined (thousands of tonnes) 9,537 13,977 54,076 Ore tonnes mined (thousands of tonnes) 1,793 1,651 7,225 Ore tonnes processed (thousands of tonnes) 1,845 1,911 7,914 Process recovery rate (percent) 89.1% 89.1% 88.7% Head grade (grams per tonne) 3.2 2.6 2.8 Attributable gold production (ounces) 168,375 142,759 637,002 Attributable gold sold (ounces) 159,384 144,277 643,597 Copper production (thousands of pounds) 2,976 2,462 11,970 Copper sold (thousands of pounds) 2,517 3,357 11,570 Per ounce data Average spot gold price2 1,293 1,631 1,411 Average realised gold price1 1,303 1,610 1,377 Total cash cost1 756 893 812 All-in sustaining cost1 1,131 1,577 1,346 Average realised copper price (US$/lb) 2.96 3.39 3.24 Cash on hand (US$'000) 254,094 401,520 282,409 Long term borrowings (US$'000) 142,000 50,000 142,000 Financial results - restated to reflect Tulawaka as a discontinued operation Three months ended Year ended 31 March 31 December (Unaudited) 2014 20133 20133 (US$'000) Revenue 216,287 245,460 929,004 Cost of sales (159,141) (183,385) (713,806) Gross profit 57,145 62,075 215,198 Corporate administration (6,356) (8,414) (33,813) Share based payment expenses (3,324) 3,436 1,656 Exploration and evaluation costs (4,970) (3,589) (16,927) Corporate social responsibility expenses (2,496) (3,151) (12,237) Impairment charges - - (1,044,310) Other charges (6,623) (2,938) (30,424) Profit/(loss) before net finance cost 33,376 47,419 (920,857) Finance income 350 588 1,670 Finance expense (2,402) (2,519) (9,552) Profit/(loss) before taxation 31,324 45,488 (928,739) Tax (expense)/credit (10,669) (14,259) 187,959 Net profit/(loss) from continuing operations 20,655 31,229 (740,780) Discontinued operations: Net profit/ (loss) from discontinued operations 1,288 (15,019) (57,653) Net profit/(loss) for the period 21,943 16,210 (798,433) Attributed to: Owners of the parent (net earnings/(loss)) 22,410 20,716 (781,101) - Continuing operations 20,655 31,229 (740,780) - Discontinued operations 1,755 (10,513) (40,321) Non-controlling interests (467) (4,506) (17,332) - Discontinued operations (467) (4,506) (17,332) Reconciliation of Group Financial Performance split by Continuing andDiscontinued Operations Three months ended 31 March 2014 Three months ended 31 March 20133 (Unaudited) Continuing Discontinued Continuing Discontinued(US$'000) Operations Operations Total Operations Operations Total Revenue 216,287 - 216,287 245,460 9,189 254,649 Cost of sales (159,141) - (159,141) (183,385) (21,290) (204,675) Gross profit 57,146 - 57,146 62,075 (12,101) 49,974 Corporate administration (6,357) - (6,357) (8,414) (989) (9,403) Share based payment expenses (3,324) (3,324) 3,436 80 3,516 Exploration and evaluation costs (4,970) - (4,970) (3,589) (809) (4,398) Corporate social responsibility expenses (2,496) (44) (2,540) (3,151) (295) (3,446) Impairment charges - - - - - - Other (charges)/ income (6,623) 1,331 (5,292) (2,938) (875) (3,813) Profit/(loss) before net finance cost 33,376 1,287 34,663 47,419 (14,989) 32,430 Finance income 350 12 362 588 8 596 Finance expense (2,402) (11) (2,413) (2,519) (38) (2,557) Profit/(loss) before taxation 31,324 1,288 32,612 45,488 (15,019) 30,469 Tax (expense)/credit (10,669) - (10,669) (14,259) - (14,259) Net profit/(loss) for the period 20,655 1,288 21,943 31,229 (15,019) 16,210 1 Average realised gold price, total cash cost per ounce, all-in sustainingcost per ounce, EBITDA, adjusted EBITDA, adjusted net earnings, adjusted netearnings per share and operating cash flow per share are non-IFRS financialperformance measures with no standard meaning under IFRS. Refer to "Non IFRSmeasures"' on page 11 for definitions. 2 Reflect the London PM fix price. 3 2013 comparative information has been restated to exclude the results ofTulawaka. For further information, please visit our website: www.africanbarrickgold.comor contact: 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 Daniel Thöle About ABG ABG is Tanzania's largest gold producer and one of the largest gold producersin Africa. We have three producing mines, all located in Northwest Tanzania,and several exploration projects at various stages of development in Tanzaniaand Kenya. We have a high quality asset base, solid growth opportunities and aclear strategy of optimising, expanding and growing our business. 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 and in accordance with IFRS as adopted by the EuropeanUnion, unless otherwise stated in this report. Conference call A conference call will be held for analysts and investors on 24 April 2014 at12:30pm London time. The access details for the conference call are as follows: Participant dial in: +44 (0) 203 003 2666 / +1 646 843 4608 Password: ABG A recording of the conference call will be made available atwww.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, 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 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, competition, fluctuations in thespot and forward price of gold or certain other commodity prices (such ascopper and diesel), currency fluctuations (including the US dollar, SouthAfrican rand, Kenyan shilling and Tanzanian shilling exchange rates), ABG'sability to successfully integrate acquisitions, ABG's ability to recover itsreserves or develop new reserves, including its ability to convert itsresources into reserves and its mineral potential into resources or reserves,and to process its mineral reserves successfully and in a timely manner, ABG'sability to complete land acquisitions required to support its miningactivities, operational or technical difficulties which may occur in thecontext of mining activities, delays and technical challenges associated withthe completion of projects, risk of trespass, theft and vandalism, changes inABG's business strategy including, ABG's further implementation of theOperational Review, as well as risks and hazards associated with the businessof mineral exploration, development, mining and production and risks andfactors affecting the gold mining industry in general. Although ABG'smanagement believes that the expectations reflected in such forward-lookingstatements are reasonable, ABG cannot give assurances that such statements willprove to be correct. Accordingly, investors should not place reliance onforward-looking statements contained in this report. Any forward-lookingstatements in this report only reflect information available at the time ofpreparation. Subject to the requirements of the Disclosure and TransparencyRules and the Listing Rules or applicable law, ABG explicitly disclaims anyobligation or undertaking publicly to update or revise any forward-lookingstatements in this report, whether as a result of new information, futureevents or otherwise. Nothing in this report should be construed as a profitforecast or estimate and no statement made should be interpreted to mean thatABG's profits or earnings per share for any future period will necessarilymatch or exceed the historical published profits or earnings per share of ABG. Operating and financial review for the three months ended 31 March 2014 During the first quarter of 2014 we continued to build on the strong platformset towards the end of 2013, with all three operating sites delivering positiveresults. This resulted in production of 168,375 ounces, an 18% increase on thesame period in 2013, with production increasing across all sites. Gold salesamounted to 159,384 ounces, 5% lower than production due to strong productionlate in the quarter at Bulyanhulu and Buzwagi which meant that the concentrateshipments did not leave site until after the end of the quarter. Bulyanhulu continues to show operational improvements which are resulting inincreased access to higher grade stopes with head grade improving by 12% fromQ1 2013 and 8% from Q4 2013. This resulted in production of 55,179 ounces, 4%higher than Q4 2013 and 45% higher than Q1 2013. Gold ounces sold amounted to49,121 ounces for the quarter, 6,058 ounces lower than production due to strongproduction late in the quarter impacting on the timing of sales. At Buzwagi, as a result of the revised mine plan, tonnes mined were 37% lowerthan Q1 2013, while ore tonnes mined were 46% higher. As part of this plan,higher grade areas have been opened up, resulting in a 23% increase in headgrade compared to Q1 2013. This more than offset the 11% decrease in throughputand slightly lower recovery rate of 88.2%. As a result, production for thequarter amounted to 44,557 ounces, 11% higher than the same period last year. At North Mara, mining continued from the higher grade zones in the Gokona pitresulting in a head grade of 3.7 grams per tonne, which more than offset the28% decrease in ore tonnes mined due to mine sequencing and the revised mineplan. Process plant improvements resulted in a slight increase in throughputand an increased recovery rate of 87.8% (87.3% in Q1 2013). As a result,production for the quarter amounted to 68,639 ounces, an increase of 6% on Q12013. Total tonnes mined amounted to 9.5 million tonnes, a decrease of 32% on Q12013, mainly driven by a decrease in waste mining at Buzwagi (45%) and NorthMara (23%) due to the change in mine plan. Ore tonnes mined of 1.8 milliontonnes were 9% higher than in Q1 2013 as a result of the increase in ore tonnesmined at Buzwagi, offset by lower ore tonnes mined at North Mara. Ore tonnesprocessed amounted to 1.8 million tonnes, a decrease of 3% from Q1 2013. Thiswas mainly driven by lower throughput at Buzwagi due to plant downtime as aresult of restricted access to higher grade ore and maintenance, partiallyoffset by improved throughput at both Bulyanhulu and North Mara. Total headgrade for the quarter of 3.2 g/t was 23% higher than in Q1 2013. This wasmainly driven by the mining of higher grade stopes at Bulyanhulu and highergrade ore mined at Buzwagi. Our total cash costs of US$756 per ounce sold were 15% lower than Q1 2013. Thedecrease was primarily due to decreased labour costs as a result of theOperational Review (US$67/oz), lower energy costs due to a lower reliance onself generated power (US$21/oz) and lower contracted services due to costsaving initiatives (US$56/oz). This was partially offset by lower capitalisedstripping and development costs driven by lower waste mining mainly at Buzwagi(US$51/oz). All-in sustaining cost per ounce sold ("AISC") of US$1,131 was 28% lower thanQ1 2013 driven by lower cash costs and the impact of the Operational Review oncorporate administration costs, capitalised development costs and sustainingcapital expenditures combined with a higher production base. This was partiallyoffset by increased share based payment expenses due to the improved shareprice performance. Copper production for the quarter of 3.0 million pounds was 21% higher than inQ1 2013, mainly due to improved grades and throughput at Bulyanhulu. Revenue of US$216.3 million was 12% lower than Q1 2013 as a result of anincrease of 10% in ounces sold being more than offset by a US$307 per ouncedecrease in the average realised price reflecting the decrease in gold prices.The average realised price for Q1 2014 amounted to US$1,303 per ounce soldcompared to US$1,610 in Q1 2013, but was marginally higher than the averagemarket price for the quarter. EBITDA of US$64.7 million was 21% lower than Q1 2013 mainly as a result of a12% decrease in revenue which was partially offset by lower direct mining costsand lower corporate administration charges. This was in part offset byincreased share based payment expenses (reflecting improved share priceperformance), increased exploration expenditure and increased other charges,mainly relating to restructuring, Tulawaka non-operational costs and the impactof a weakening exchange rate on the revaluation of Tanzanian Shillingdenominated receivables. Capital expenditure for the quarter amounted to US$55.7 million compared toUS$100.8 million in Q1 2013. Key capital expenditures included the BulyanhuluCIL Expansion project (US$14.9 million), capitalised stripping at Buzwagi andNorth Mara (US$21.9 million), capitalised underground development at Bulyanhulu(US$11.3 million) and group sustaining capital investments of US$7.5 million.In addition, land purchases of US$4.2 million were incurred at North Maraduring the quarter compared to US$4.1 million in Q1 2013. The cash balance as at 31 March 2014 amounted to US$254 million, with positivecash flow from sustaining operations of US$13.3 million offset by the totalcash outflow related to Tulawaka of US$15.9 million, US$14.9 million ofexpansionary capital as explained above, and a US$6.8 million reduction ofamounts previously accrued toward the CIL Expansion. Bulyanhulu Key statistics Three months ended Year ended 31 31 March December (Unaudited) 2014 2013 2013 Underground ore tonnes hoisted Kt 211 172 872 Ore milled Kt 220 171 871 Head grade g/t 8.5 7.6 7.8 Mill recovery % 91.7% 91.3% 90.9% Ounces produced oz 55,179 38,036 198,286 Ounces sold oz 49,121 33,416 195,304 Cash cost per ounce sold US$/oz 811 1,192 890 AISC per ounce sold US$/oz 1,145 1,921 1,344 Copper production Klbs 1,296 856 4,855 Copper sold Klbs 1,194 868 4,508 Breakdown of Capital Expenditure - Sustaining capital US$('000) 2,148 7,593 25,193 - Capitalised development US$('000) 11,256 12,280 45,428 - Expansionary capital US$('000) 14,859 22,743 114,912 Capital expenditure US$('000) 28,263 42,616 185,533 - Non-cash reclamation assetadjustments US$('000) 5,665 (2,365) (10,044) Total capital expenditure US$('000) 33,928 40,251 175,489 Operating performance Bulyanhulu continues to show operational improvements which are resulting inincreased access to higher grade stopes with head grade of 8.5g/t improving by12% from Q1 2013 and 8% from Q4 2013. This resulted in production of 55,179ounces, 4% higher than Q4 2013 and 45% higher than Q1 2013. Gold ounces soldamounted to 49,121 ounces for the quarter, 6,058 ounces lower than productiondue to strong production late in the quarter impacting on the timing of sales. Ore tonnes mined and throughput remain at similar levels to Q4 2013, but were23% and 29% higher respectively than in Q1 2013, which was impacted by downtimeas a result of the failure of the production winder transformer and workforceshortages. Improvements made in the process plant together with the improvedgrade resulted in an improved recovery rate of 91.7%. Copper production for the quarter of 1.3 million pounds was 51% higher thanthat of the same period in 2013, primarily due to an improved copper grade andhigher throughput. Cash costs were US$811 per ounce sold compared to US$1,192 in the prior yearperiod mainly driven by the higher production base, lower maintenance costs dueto improved condition monitoring controls and lower labour costs as a result ofthe Operational Review. This was in part offset by increased energy and fuelcosts given the temporary requirement for self generation of power duringJanuary due to local damage to Tanesco transmission lines and an increase inmining activity and lower capitalised development costs. AISC per ounce sold was 41% lower than the prior year period at US$1,145 perounce as a result of the lower cash cost base and lower capitalised developmentcosts and sustaining capital. On the 25th March, Emmanuel Mrutu, one of our underground employees sadlypassed away as a result of injuries sustained following a fall of groundincident. Operations were ceased for a 24 hour period and investigations intothe incident are underway. The Board has approved the next step in the optimisation of Bulyanhulu throughthe acceleration of mining from the Upper East Zone. The development of thisarea will require additional 2014 capital of approximately US$15 million, withinitial production from the zone expected within 3 months. The area is expectedto produce 1.7 million ounces of gold, averaging 60,000 ounces per annum over alife in excess of 25 years at all-in sustaining costs of below our target runrate for Bulyanhulu for year-end 2015 of US$900 per ounce. The CIL Expansion, which will add over 40,000 ounces per annum once fullyramped up, has now moved into the commissioning phase. The project remains onbudget with first gold expected in late Q2 2014. These two projects, together with the planned step up in mined grade representimportant steps in the optimisation of Bulyanhulu. Capital expenditure for the quarter of US$28.3 million was US$14.4 millionlower than the prior year period. Key capital expenditure included the CILExpansion project (US$14.9 million) and capitalised development costs ofUS$11.3 million. Buzwagi Three months ended Year ended 31Key statistics 31 March December (Unaudited) 2014 2013 2013 Tonnes mined Kt 5,543 8,830 32,177 Ore tonnes mined Kt 1,021 701 3,753 Ore milled Kt 970 1,093 4,400 Head grade g/t 1.6 1.3 1.5 Mill recovery % 88.2% 89.3% 88.2% Ounces produced oz 44,557 40,020 181,984 Ounces sold oz 42,963 51,811 187,348 Cash cost per ounce sold US$/oz 927 802 945 AISC per ounce sold US$/oz 1,274 1,654 1,506 Copper production Klbs 1,681 1,606 7,115 Copper sold Klbs 1,323 2,489 7,062 Breakdown of Capital Expenditure - Sustaining capital US$('000) 1,861 16,145 31,589 - Capitalised development US$('000) 9,632 23,912 60,136 - Expansionary capital US$('000) - - - Capital expenditure US$('000) 11,493 40,057 91,725 - Non-cash reclamation assetadjustments US$('000) 665 (1,039) (9,230) Total capital expenditure US$('000) 12,158 39,018 82,495 Operating performance As previously announced, 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 arecontinuing to see a positive impact on the cost base. Total tonnes mined of 5.5 million tonnes were 37% lower than Q1 2013, while oretonnes mined were 46% higher as a result of the changes to the mine plan.Isolated instability of the Western wall of the pit resulted in a change inmine sequencing which, in combination with mining constraints followingflooding after heavy rains in March 2014, negatively impacted on total tonnesmined and the availability of higher grade ore but have increased wastemovement compared to the mine plan. These operational constraints have now beenaddressed and we expect mining tonnes and the grade mined to return to expectedlevels during Q2 2014. During Q1 2014 the reduced ore tonnes mined led to reduced mill utilisation,with a number of maintenance shutdowns rescheduled in the quarter to minimiseadditional downtime, resulting in an 11% decrease in tonnes milled from Q12013. Daily throughput rates remained at nameplate capacity. As a result ofchanges in the mine plan focusing mining on higher grade areas, the head gradeof 1.6 g/t was 23% higher than in Q1 2013, but lower than planned levels forthe quarter as a result of the constraints discussed above. As a result of the above factors, production for the quarter amounted to 44,557ounces, an 11% increase from Q1 2013. Gold ounces sold during the quartertrailed production by 4% due to the timing of March 2014 production beingweighted towards the end of the month. Copper production for the quarter of 1.7million pounds was 5% above that of the same period in 2013. This was primarilydue to the increased copper recoveries that were slightly offset by lowerthroughput and copper grade. Cash costs for the quarter were US$927 per ounce sold compared to US$802 in2013. Cash costs have been positively affected by the impact of the revisedmine plan on activity based costs, lower labour costs mainly due to a reductionof international employees, and lower reliance on self generated power.However, this was more than offset by lower gold sales, capitalised developmentcosts driven by the lower waste mining activity and lower co-product revenue asa result of lower copper prices. AISC per ounce sold of US$1,274 per ounce decreased by 23% from Q1 2013 and wasalso 2% below Q4 2013. This was due to lower sustaining capital and capitalisedstripping costs, partially offset by higher cash costs. Capital expenditure for the quarter of US$11.5 million was 71% lower than theprior year period, driven by lower sustaining capital and capitalised strippingcosts as a result of the new mine plan. North Mara Key statistics Three months ended Year ended 31 31 March December (Unaudited) 2014 2013 2013 Tonnes mined Kt 3,783 4,975 21,027 Ore tonnes mined Kt 560 777 2,601 Ore milled Kt 655 646 2,643 Head grade g/t 3.7 3.6 3.5 Mill recovery % 87.8% 87.3% 86.8% Ounces produced oz 68,639 64,704 256,732 Ounces sold oz 67,300 59,050 260,945 Cash cost per ounce sold US$/oz 607 804 659 AISC per ounce sold US$/oz 980 1,369 1,227 Breakdown of Capital Expenditure - Sustaining capital US$('000) 3,531 14,779 38,386 - Capitalised development US$('000) 12,267 6,646 65,594 - Expansionary capital US$('000) - 128 949 Capital expenditure US$('000) 15,798 21,553 104,929 - Non-cash reclamation assetadjustments US$('000) 3,976 (1,508) (11,271) Total capital expenditure US$('000) 19,774 20,045 93,658 Operating performance North Mara delivered another strong operating performance this quarter, anddelivered gold production of 68,639 ounces, an increase of 6% on Q1 2013 and14% on Q4 2013. Gold ounces sold amounted to 67,300 ounces for the quarter,slightly lower than production. Ore tonnes mined continued to be predominantly from the high grade zones of theGokona pit, with head grade of 3.7 g/t slightly higher than the prior yearperiod, but 9% higher than Q4 2013. We are currently removing waste in theNyabirama pit in order to increase our access to ore, and expect mining fromthis pit to increase from the middle of Q2 2014 which will lead to a decreasein head grade. Throughput and recovery was broadly in line with the prior yearperiod. Total tonnes mined for the quarter amounted to 3.8 million tonnes, 24% lowerthan the same quarter in 2013 as a result of changes made to the mine plan inQ3 2013, while ore tonnes mined of 560 thousand tonnes were 28% lower than2013. Cash costs were US$607 per ounce sold compared to US$804 in the prior yearperiod. The decrease in cash cost per ounce was driven by the increasedproduction base, lower labour costs mainly as a result of a reduction ininternational employees as part of the Operational Review, lower contractedservices and consumables as a result of the lower mining activity and anincreased in capitalised stripping. AISC per ounce of US$980 was 28% lower than the prior year period as a resultof the lower cash costs as explained above, lower sustaining capitalexpenditure, lower corporate administration and social responsibilityexpenditure, slightly offset by an increase in capitalised stripping costs. Inaddition, AISC includes US$4.2 million of land payments made during thequarter. Capital expenditure for the quarter of US$15.8 million was 27% lower than theprior year. Key capital expenditure included capitalised stripping (US$12.3million) and investments in mine equipment for component change-outs, tailingsand infrastructure (US$3.5 million). As part of the feasibility study into the potential to mine Gokona Cut 3 via anunderground operation, the Board approved the development of an explorationportal in the existing open pit. The portal will provide the opportunity todevelop a better understanding of the ore body, initial access to ore anddrilling access to the deeper extensions of the ore body. Final geotechnicalwork is underway to decide the location of the portal with constructionexpected to commence in Q3 2014. The total cost of the portal is expected to beunder US$10 million, and this cost is expected to be partially offset byrevenue from ore produced as part of the feasibility test work. Exploration and Development Review Bulyanhulu Deeps West Surface Drilling In late 2013, we commenced drilling of three deep diamond core holes west ofthe Bulyanhulu mine, targeting the extension of Reef 1 and Reef 2 vein serieswest of the currently delineated resources. The holes are designed topredominantly test the extensions of the Reef 1 structure from 400 metres to1,200 metres west of the current Bulyanhulu resource where historic drillinghas shown indications of further gold mineralisation. The drilling is targetinga potential new economic zone and plunge extensions of the Main Zone of Reef 1at depths of between 1km and 2.5km vertical. Additionally, holes will alsointersect the Reef 2 vein series, and provide an indication of whether the Reef2 system is mineralised up to 2km west of current underground resources. During Q1 2014, a total of 3,369 metres of diamond core was drilled from thesurface holes. Two rigs are involved in this surface drilling programme, whichwill continue well into 2014. The Reef 1 and Reef 2 system was intersected inseveral holes during Q1 2014 with encouraging results including significantintersections of: BGMDD0055W2: 0.80m @ 16.2g/t Au from 944m - Reef 2 BGMDD0055W3: 0.50m @ 7.90g/t Au from 950m - Reef 2 BGMDD0055W3: 0.79m @ 7.00g/t Au from 1,059m - Reef 1 BGMDD0054W3: 1.20m @ 11.5g/t Au from 1,367m - Reef 2 The results from these holes are potentially significant in demonstrating thatgold mineralisation continues west of the mine which would open the potentialfor a large expansion of the footprint of Bulyanhulu on both Reef 1 and Reef 2.The drilling programme will continue through 2014 and will compriseapproximately 10,000 metres of further diamond core drilling from the threeactive and planned drill sites. This programme will form an important part ofour assessment of how to most effectively develop the mine over the long term. Bulyanhulu East Deeps Underground Drilling - Reef 2 The East Deeps drilling programme is targeting down dip mineralisation of theBulyanhulu Reef 2 system which is outside the current resource model. Theprogramme is being drilled from several underground drill platforms and isaimed at adding high grade gold resources on the East Zone. Drilling continuedin Q1 2014 with a total of 2,464 metres of diamond core completed from twoholes, with assay results returning the following significant intersections: UX4700-408: 1.75m @ 13.6g/t Au from 1,042m Incl. 0.68m @ 25.3g/t Au from 1,043m UX4700-409: 1.35m @ 4.08g/t Au from 1,129m Incl. 0.55m @ 8.70g/t Au from 1,130m The Reef 2 significant intersections continue to prove continuity at depth ofthe mineralisation with high grade. This has the potential to add significantlyto the mine resource and increase the life of mine. The final drill hole in theprogramme is underway and following completion of which the programme will bereviewed before more drilling is undertaken. West Kenya Joint Venture Projects Exploration activities in Kenya continue to focus on grassroots targetgeneration with soil sampling, rock chip sampling and Aircore drillingcontinuing throughout the Kakamega and Lake Zone gold camps. Assay results froma further 327 reconnaissance Aircore drill holes testing existing gold-in-soilanomalies along the Liranda Corridor on the south side of the Kakamega Domehave been returned with some very positive results including: KDAC0312: 3m @ 15.2 g/t Au from 41m and 9m @ 1.71 g/t Au from 62m KDAC0361: 39.5m @ 0.81 g/t Au from 9m, including 6m @ 2.26 g/t Au KDAC0376: 9m @ 2.57 g/t Au from 57m The Aircore results to date are very encouraging given the current line spacingof the Aircore traverses varies between 400 metres and 800 metres and theaverage depth of drilling to date is a relatively shallow 40-50 metres. Infilltraverses will be undertaken as part of phase two of the programme beforetargets will be ranked for testing by more advanced reverse circulation anddiamond drilling. In addition to the Aircore programme we continue to undertake extensive soilsampling of the licence area with a further 3,323 samples collected in Q1 2014with over 50 gold-in-soil anomalies now delineated for follow-up work. In tandem with this we have commenced gradient IP and Resistivity acrossselected gold-in-soil anomalies. These surveys aim to target mineralisationassociated with sulphides and or resistive lithologies, structures oralteration. Seven anomalies have been covered by IP surveys to date forapproximately 88 line kilometres, with four targets showing distinctresistivity and/or chargeability zones coincident with the gold-in-soilanomalies and should be considered as priority targets for future drillingprogrammes. 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 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, and production taxes,and exclude capitalised production stripping costs, inventory purchaseaccounting adjustments, unrealised gains/losses from non-hedge currency andcommodity contracts, depreciation and amortisation and corporate socialresponsibility charges. Cash cost is calculated net of co-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 cost per ounce sold are calculated by dividing the aggregate ofthese costs by gold ounces sold. Cash costs and cash cost 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: Three months ended 31 March 2014 Three months ended 31 March 2013 (Unaudited) ABG Group ABG Group ongoing ongoing(US$/oz sold) Bulyanhulu North Mara Buzwagi operations Bulyanhulu North Mara Buzwagi operations Cash cost per ounce sold 811 607 927 756 1,192 804 802 893 Corporate administration 43 32 37 40 118 50 54 58 Share based expenditure 1 2 13 21 (6) (4) (3) (24) Rehabilitation 7 18 9 12 11 38 19 25 Mine exploration 2 1 1 2 7 15 3 9 CSR expenses 7 18 19 16 6 33 6 22 Capitalised development 229 182 224 208 367 113 462 297 Sustaining capital 44 119 43 77 227 319 311 297 Total 1,145 980 1,274 1,131 1,921 1,368 1,653 1,577 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. 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; Impairment charges of goodwill and other long-lived assets; and Discontinued operations. 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. Cash margin is a non-IFRS financial measure. The cash cost margin is theaverage realised gold price per ounce less the cash cost per ounce sold. 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 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.