Acacia Mining plc Bank of America Merrill Lynch Global Metals and Mining Conference

Transcription

1 Acacia Mining plc Bank of America Merrill Lynch Global Metals and Mining Conference

2 Important Notice This presentation 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 presentation. Any forward-looking statements in this presentation 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 forwardlooking statements in this presentation, whether as a result of new information, future events or otherwise. Nothing in this presentation should be construed as a profit forecast or estimate and no statement made should be interpreted to mean that Acacia s profits or earnings per share for any future period will necessarily match or exceed its historical published profits or earnings per share. Mineral reserves and mineral resources estimates contained in this presentation have been calculated as at 31 December 2016 in accordance with National Instrument as required by Canadian securities regulatory authorities. Canadian Institute of Mining, Metallurgy and Petroleum (CIM) definitions were followed for mineral reserves and resources. The reserves and resources figures stated are estimates. No assurances whatsoever can be given that the indicated quantities of metal will be produced and totals stated may not add up due to rounding. You are reminded that you have received this presentation on the basis that you are a person to whom this presentation may be lawfully made and delivered. You may not and are not authorised to: (i) reproduce or publish this presentation; or (ii) distribute, disclose or pass on this presentation to any other person, in whole or in part, by any medium or in any form, in breach of any applicable securities laws. BY ACCEPTING THIS PRESENTATION, YOU ACKNOWLEDGE AND AGREE TO THE CONTENTS OF THIS DISCLAIMER AND YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. Bank of America Merrill Lynch Global Metals and Mining Conference 2

3 Company Overview A leading African asset portfolio with a high-grade R&R of 27.5Moz Our Assets Business Overview West Kenya Project Kenya North Mara High-grade open pit / UG mine At least 10 year mine life High grade U/G mine nearing Bulyanhulu geological potential Kenieba Belt JVs Mali Houndé Belt JVs Burkina Faso Nyanzaga Project Tanzania North Mara Tanzania Bulyanhulu Tanzania Buzwagi Tanzania Buzwagi At least 18 year mine life Low-grade open pit which completes mining at end of 2017 Will process stockpiles until 2020 Maiden high-grade resource Exploration declared in West Kenya Producing mines Exploration properties Built a pan-african portfolio Bank of America Merrill Lynch Global Metals and Mining Conference 3

4 Our Operating Philosophy Creating a sustainable competitive advantage based on core competencies We run de-centralised operations and outsource any function where we can t be a world leader Four areas we will never outsource: Technical prowess Discovery Leadership Government and Community relationship Capital allocation is centralised and led by the CEO Operational focus on creating sustainable free cash flow Bank of America Merrill Lynch Global Metals and Mining Conference 4

5 AISC (US$/oz) Production (koz) We have transformed our business At this stage, despite current concentrate ban, we continue to expect further production and AISC improvement in 2017 AISC 1,800Progression vs Production ,500 1, ,200 1, ,105 1, E AISC Gold production 600 (1) 2017 chart represents mid-point of guidance range Bank of America Merrill Lynch Global Metals and Mining Conference 5

6 $ / ounce Production (koz) Q Performance Continuing strong operational performance, financials impacted by ban Production Gold production of 220koz, 15% higher than Q Gold sales were 35koz lower than production Primarily as a result of the Tanzanian Government s directive stopping the export of metallic mineral concentrate AISC was below previous quarter at US$934/oz Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Buzwagi Bulyanhulu North Mara EBITDA of US$82 million, 25% higher than Q Due to sales lagging production and indirect tax outflows net cash decreased to US$196 million All In Sustaining Cost per Ounce 1,200 1, Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 AISC AISC ex RSU Bank of America Merrill Lynch Global Metals and Mining Conference 6

7 $ / ounce Production (koz) Grade (g/t) North Mara Tanzania A leading asset in Africa, driving free cash flow High-grade open pit and underground mine comprising two deposits: Gokona transitioned open pit to underground operations in mid 2015 Nyabirama - open pit with U/G potential Record year in 2016 driven by ramp up of U/G Guiding for 2017 production to be up to 10% lower than 2016 with AISC up to 10% higher Extensive drill programmes underway to prove up at least a 10 year life at +300koz per annum Production & Head Grade All In Sustaining Cost per Ounce 1,600 1,400 1,200 1, , Implied 2017 guidance E Production (OP) Production (UG) Head Grade Implied 2017 guidance E Cash Cost Sustaining Capital Capitalised Development Other Bank of America Merrill Lynch Global Metals and Mining Conference 7

8 Extensive Brownfields Opportunities Targeting reserves to support at least a 10 year life at greater than 300koz per annum Gokona Nyabirama 9 Targeting resource extensions Significant drill programmes underway over the next two years Initial results under Gokona include 64.7g/t and 59.9g/t Already extended high grade structures beneath Nyabirama to a vertical depth of approximately 950m Targeting transition to U/G on completion of the open pit in 2021 Bank of America Merrill Lynch Global Metals and Mining Conference 8

9 $ / ounce Production (koz) Grade (g/t) Bulyanhulu - Tanzania Continuing the transformation High grade narrow vein deposit Geological endowment of over 20 million ounces* History of under-delivery and lack of free cash generation Undertaken re-engineering of the mine to ensure delivers to its geologic potential 2016 was the highest production since 2006 as mine starts to deliver on potential AISC has fallen significantly as changes to mine take effect Ramping production to +300kozpa over the coming years Continuing to operate normally and stockpiling concentrate production Represents ~45% of mine production * Including produced ounces Bank of America Merrill Lynch Global Metals and Mining Conference Production & Head Grade E Production (UG) Production (Tails) Head Grade (ROM) All In Sustaining Cost per Ounce 1,600 1,400 1,200 1, ,344 1,266 1,253 1, Implied 2017 guidance Implied 2017 guidance E Cash Cost Sustaining Capital Capitalised Development Other 9

10 $/ounce Production (koz) Grade (g/t) Buzwagi - Tanzania Set up to deliver additional cash flow from re-sequencing open pit Bulk tonnage open pit mine Q1 17 production of 60koz, 62% higher than Q1 2016, at an AISC of US$773/oz Driven by a 64% increase in head grade Extended mining by six months until the end of 2017 Will process stockpiles until 2020 Adds 150koz of production over the LOM Expect a 40% increase in production and up to 30% reduction in AISC in 2017 Continuing to operate normally and stockpiling concentrate production Represents ~55% of mine production Production & Head Grade All In Sustaining Cost per Ounce 1,800 1,600 1,400 1,200 1, , , , ,095 1,046 1,031 Implied 2017 guidance E Production (OP) Production (UG) Head Grade Implied 2017 guidance E Cash Cost Sustaining Capital Capitalised Development Other Bank of America Merrill Lynch Global Metals and Mining Conference 10

11 Major contributor to host economies Tanzania continues to received increased benefits from our operations Over time we have agreed to follow a number of the 2010 Mining Code regulations Despite the terms of the stabilisation agreements signed with the Government Contributes to the Tanzanian Government s aim of self-funding the national budget The voluntary concessions include: Local service levies at each mine increased from US$200k to 0.3% of revenues (~US$1mpa per mine) Increasing royalty payments to 4% in 2012, which has increased the royalty paid to the Government by US$50 million in last 4 years Led to total local tax contribution of US$164 million in 2016 Incurred a corporate tax charge amounting to US$55 million Royalties of US$47 million Payroll taxes of US$40 million Other taxes of approximately US$22 million Bank of America Merrill Lynch Global Metals and Mining Conference 11

12 Metallic Mineral Concentrate Ban Impacting approximately 30% of group revenues In March 2017, the Ministry of Energy and Minerals announced a ban on the export of metallic mineral concentrates In order to promote the creation of a domestic smelting industry Impacts approximately 45% of Bulyanhulu s revenues and 55% of Buzwagi s revenues North Mara is not impacted as it only produces doré Continuing to engage with Government to achieve a resolution Operating Bulyanhulu and Buzwagi as normal and stockpiling concentrate at each of the sites Taken a range of actions to help manage the significant financial impact of the deferral of sales During Q1 this negatively impacted cashflow by US$33 million due to loss of sales Will re-assess the operational plans of the two mines if we cannot reach a resolution in the coming weeks Bank of America Merrill Lynch Global Metals and Mining Conference 12

13 Local listing requirements Sector wide legislation to promote local ownership Focus from the Government to increase transparency of business in Tanzania Enacting regulation on a sector by sector basis, to make companies list on the local stock exchange First sector to be impacted was Telecommunications followed by mining Mining regulations impose two main obligations 30% local shareholding obligation through listing on the local stock exchange Obligation for each of the entities that own Bulyanhulu, Buzwagi and North Mara to individually list Deadline for listing is 23 August 2017 Acacia Mining plc cross-listed on the DSE in 2011, to promote Tanzanian ownership Engaging with the relevant authorities in Tanzania To find a route forward that is both beneficial and practical for all stakeholders Bank of America Merrill Lynch Global Metals and Mining Conference 13

14 Investing in Our Future We believe in exploration as a key driver of value and our approach is beginning to deliver results Systematically created a pan-african greenfield exploration footprint Exploration pipeline with over 60 targets 12 rigs drilling greenfields projects across the portfolio West Kenya Project Kenya 135,000 metres drilled in ,000 metres budgeted for greenfield budget increased by 15% to US$25m Key projects for 2017: West Kenya Houndé Belt Kenieba JVs Mali Houndé Belt JVs Burkina Faso Nyanzaga Project Tanzania North Mara Tanzania Bulyanhulu Tanzania North Mara (Gokona UG & Nyabirama UG) Brownfield projects Greenfield projects Bank of America Merrill Lynch Global Metals and Mining Conference 14

15 West Kenya Project Broad initial exploration programmes focused on identifying potential new deposits within ~1,600sqkm land package Acquired project in 2012 Extensive first pass exploration across land package undertaken Over 37,000 soil samples 60km of reconnaissance drilling 80km of RC/DD prospect drilling Imaged soil geochemistry and prospect map Geological review identified a series of corridors across land package Identified high grade shoots in Liranda Corridor in 2015 Bank of America Merrill Lynch Global Metals and Mining Conference 15 Delineated high grade Acacia & Bushiangala shoots Increased ownership in primary licences to 100% for US$5m in 2016

16 Maiden Resource on Liranda Corridor One of the highest grade projects in Africa Declared NI compliant Inferred Resource 1.31 million ounces of gold at 12.1 grams per tonne All of the resource is located on the Acacia prospect (one of five prospects on the Liranda Corridor) which remains open laterally and at depth Mineralisation associated with shear zones averaging 3 metres wide, dependent on the zone, hosted by a mafic volcanic sequence Strike lengths vary between 200m and 600m Resource is currently defined down to a vertical depth of 750m Near term upside from Bushiangala prospect First step in the delineation of a multi-million ounce high-grade corridor Tonnes Grade (Au g/t) Ounces Inferred Resource 1 3,461, ,305,700 1 The Mineral Resource has been estimated by Ms C Pitman, P.Geo.(Ontario) of AdiuvareGE. in conformity with the CIM Mineral Resources and Mineral Reserves Estimation Best Practice Guidelines (CIM, 2003) and are classified according to the CIM Standard Definition for Mineral Resources and Mineral Reserves (CIM, 2014). Bank of America Merrill Lynch Global Metals and Mining Conference Visible Gold in diamond core from hole LRCDD

17 Liranda Corridor New targets evolving Potential for a multi-million ounce gold camp emerging Bushiangala Acacia Shigokho-Shibunane 1km Focus of 2016 drilling Potential further upside being tested in 2017 Primary focus of 2017 drilling Bank of America Merrill Lynch Global Metals and Mining Conference 17

18 Investment Case Focused on long term value creation for all of our stakeholders Continue to expect a fifth consecutive year of increased production Will represent a 40% (1) uplift from 2012 Further reduction in costs across the business AISC will have fallen by US$775 (1) per ounce since Q Portfolio of assets set up to deliver free cash flow with a strong balance sheet to withstand impact of concentrate ban Net cash position of US$196 million Delivering success through the drill bit across Africa West Kenya Project on the cusp of delivering high grade resource ounces Engaging with Government to build long-term partnership that provides mutual success and stakeholder value (1) Mid point of 2017 guidance ranges Bank of America Merrill Lynch Global Metals and Mining Conference 18