ACA.L Regulatory News (ACA)

AFRICAN BARRICK GOLD PLC - Update on the Operational Review

PR Newswire

London, May 13

During Q1, ABG launched an Operational Review (the "Review") to ensure thebusiness is able to deliver robust returns and cash flow over the long term andin the current gold price environment. As previously announced, this Review isaimed at realising clear benefits in our cost structure and operating metrics,based on five key areas:

The Review has been broken into three concurrent workstreams with an immediatefocus (Workstream 1) on the Corporate Overheads, Exploration, Capital spend andthe overall Organisational Structure. We have already implemented a series ofmeasures which will substantially reduce the year on year expenditure in theseareas, including:

- A $50 million reduction in our sustaining capital

- A reduction of $25 million in our exploration spend

- $8 million of savings in our corporate overheads

As part of the Review process, we are reassessing our staffing requirementsboth at our mine sites and our offices in order to ensure we have the optimalstructure, as well as the appropriate mix of employees and contractors. Thisincorporates the ongoing progress we have made in increasing the proportion ofTanzanian employees in our workforce to the extent that over the last 12 monthswe have reduced the level of international employees by 16%. This substantiallylowers the turnover in our workforce and improves the cost profile, and this isan area where we will continue to work to make further improvements.

The second workstream is focused on the other operating costs which representthe largest area of expenditure within our organisation and we have identifieda range of opportunities where we believe there is significant cost reductionpotential. Project teams have been formed for each of these areas and areworking to identify and quantify specific cost reduction opportunities withineach of the following areas:

- Maintenance

- Aviation, Camp Services, Travel, Vehicles and Administration

- Consumables

- Contractor and External Services

- Energy

- Security

The third workstream is the complete review of our life of mine plans at eachof our operations and the options available to ABG to enhance cash flowgeneration in the near term. The review is aimed at optimising productionlevels with the amounts of operating and sustaining capital required in orderto maximise returns. Given the recent movements in the gold price, scenariosare also being run at different gold prices in order to ensure maximumflexibility at various potential price levels.

We are also reviewing all future expansion capital as part of the overallReview process. The CIL Expansion project at Bulyanhulu is well underway andscheduled to deliver first production and positive cash flows in Q1 next year,with an annualised run rate of 40,000 ounces. The project, which issubstantially financed through a $142 million export credit facility at 250basis points over LIBOR, remains on budget and schedule, with $48 million spentto date. With respect to other projects, our intention is to review them inlight of the current cash generation of the business and other capitalcommitments.

While we have made substantial progress on the Operational Review, we arecritically aware of the need to deliver the most effective structure for thebusiness in the shortest timeframe possible. To this end, we have decided toaugment our internal capacity by engaging KPMG to provide both additionalsupport and an external perspective on our findings to ensure we meet thetimelines to which we have committed. This will also enable us to benefit fromthe experience of the KPMG team in carrying out similar engagements elsewherein the sector.

Commenting, CEO Greg Hawkins said: "After a challenging period in 2012, it hasbeen encouraging to hit our targets in the last two quarters. We have madesignificant improvements to the Buzwagi operation, whileNorth Mara isperforming well andBulyanhulu is on track for recovery. We are making goodprogress on cost reductions through the Operational Review and we are wellunderway with a complete life of minereview of the assets. We have moved toshut our high cost mine at Tulawaka, are on track with our expansion project atBulyanhulu and are determined to ensure that ABG can generate robust cash flowsover the long term".

ENQUIRIES

For further information contact:

Andrew Wray, Head of Corporate Development & Investor RelationsGiles Blackham, Investor Relations Manager

ABG is Tanzania's largest gold producer and one of the five largest goldproducers in Africa. We have four mines, all located in Northwest Tanzania, andseveral exploration projects at various stages of development in Tanzania andKenya. We have a high-quality asset base, solid growth opportunities and aclear strategy of:

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.

Forward-looking statements

This announcement is for information purposes only and does not constitute aninvitation or offer to underwrite, subscribe for or otherwise acquire ordispose of any securities of ABG in any jurisdiction.

This announcement 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 and information regarding plans, objectives andexpectations with respect to future production, projects, operations, costs,products, services 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. Factors that could cause orcontribute to differences between the actual results, performance andachievements of ABG include, but are not limited to, changes in political,economic and business conditions in countries in which ABG operates or may inthe future operate, industry trends and developments, competition, fluctuationsin the spot and forward price of gold and copper or certain other commodities(such as diesel fuel and electricity) , changes in legislation or regulation,currency fluctuations (including the US dollar, South African rand, Tanzanianshilling and Kenyan shilling exchange rates), ABG's ability to successfullyintegrate acquisitions, ABG's ability to recover its reserves or develop newreserves, including its ability to convert its resources into reserves and itsmineral potential into resources or reserves, and to timely and successfullyprocess its mineral reserves, operating or technical difficulties in connectionwith mining or development activities, delays and technical challengesassociated with the completion of projects, its ability to successfullyimplement the operational review , risk of trespass, theft and vandalism,changes ABG's its business strategy as well as risks and hazards generallyassociated with the business of mineral exploration, development, mining andproduction. 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 in this announcement. Anyforward-looking statements in this announcement only reflect informationavailable at the time of preparation. Subject to the requirements of theDisclosure and Transparency Rules and the Listing Rules or applicable law, ABGexplicitly disclaims any obligation or undertaking publicly to release theresult of any revisions to any forward-looking statements in this announcementthat may occur due to any change in ABG's expectations or to reflect events orcircumstances after the date of this announcement. Nothing in this announcementshould be construed as a profit forecast or estimate.