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Third Quarter Production and Full Year Guidance Update

Tue, 6th Oct 2015 07:00

ACACIA MINING PLC - Third Quarter Production and Full Year Guidance Update

PR Newswire

London, October 5

06 October 2015

Acacia Mining plc

LSE:ACA

(“Acacia” or the “Company”)

Third Quarter Production and Full Year Guidance Update

Acacia today announces preliminary production for the quarter ended 30 September 2015, with lower than expected output of approximately 164,000 ounces, as several short-term factors negatively impacted output at Bulyanhulu and Buzwagi over the period. North Mara performed in line with expectations. As a result of the lower levels of production, cash cost per ounce sold and all-in sustaining cost per ounce sold (“AISC”) for the quarter will be above US$800 per ounce and US$1,200 per ounce respectively. 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 (718,851 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$675-725 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.

As a result of the operational performance, together with the payment of the interim dividend of US$6 million in September, net cash declined by approximately US$45 million, to stand at approximately US$100 million at 30 September 2015. Gross cash on the balance sheet was approximately US$226 million.

Commenting on the update, Brad Gordon, CEO of Acacia said; “I am personally very disappointed in the operational performance in the third quarter, which saw a succession of small issues impact Buzwagi and the ramp up at Bulyanhulu. We have addressed each of these to ensure they do not impact future performance. Importantly, key underlying metrics at Bulyanhulu, such as underground development rates, mining widths and stope availability are on track to sustain a step-up in production in Q4 2015.”

At Bulyanhulu, the anticipated production ramp up did not materialise during the quarter, leading to production of approximately 62,000 ounces, with run-of-mine production of 55,000 ounces and reclaimed tailings production of 7,000 ounces. The reduced output was primarily due to delays in opening new high grade long-hole stopes, which led to lower ore tonnes mined than planned and reduced head grade together with lower plant recoveries. 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.

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.

At Buzwagi, production of approximately 34,000 ounces for the quarter was impacted 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. 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.

At North Mara, production of approximately 68,000 ounces was in line with plan. As expected, mined grade from the underground operation increased. This was due to the proportion of stoping ore of total underground ore production increasing over the quarter, and we expect this trend to continue into the fourth quarter.

Acacia will be hosting a conference call for investors and analysts today at 12.00 midday, London time. The access details for the conference call are as follows:

Participant dial in: +44 (0) 203 003 2666 / +1 866 966 5335
Password: Acacia

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

Acacia will announce its full third quarter results on 21 October 2015.

ENQUIRIES

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

Acacia Mining plc +44 (0) 20 7129 7150

Giles Blackham, Investor Relations Manager

Bell Pottinger +44 (0)20 3772 2500

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 north-west 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. 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 announcement.

Disclaimer and forward-looking statements

This announcement is for information purposes only and does not constitute an invitation or offer to underwrite, subscribe for or otherwise acquire or dispose of any securities of Acacia in any jurisdiction.

This announcement includes “forward-looking statements” that express or imply expectations of future events or results as opposed to historical facts. These statements include, 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 herein. 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 and 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 announcement.

Any forward-looking statements in this announcement only reflect information available at the time of preparation. Subject to the requirements of the Disclosure and Transparency Rules and the Listing Rules or applicable law, Acacia explicitly disclaims any obligation or undertaking publicly to update or revise any forward-looking statements in this announcement, whether as a result of new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast or estimate.

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