Committed to Transparency ACACIA MINING PLC 2017 PAYMENTS TO GOVERNMENTS REPORT

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Godwin Hill
5 years ago
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1 Committed to Transparency ACACIA MINING PLC 2017 PAYMENTS TO GOVERNMENTS REPORT

ABOUT US Acacia is one of the largest gold producers in Africa. We have three mines, all located in North-West Tanzania, and a portfolio of exploration projects across the continent.

PRODUCING MINES BULYANHULU 175,491oz 2017 gold production BUZWAGI 268,785oz 2017 gold production NORTH MARA 323,607oz 2017 gold production EXPLORATION NEAR-MINE/BROWNFIELD North Mara Gokona

2 ABOUT US Acacia is one of the largest gold producers in Africa. We have three mines, all located in North-West Tanzania, and a portfolio of exploration projects across the continent. WEST AFRICA Building a portfolio of exciting exploration properties in the Houndé Belt in Burkina Faso and the Senegal-Mali Shear Zone in Mali. PRODUCING MINES BULYANHULU 175,491oz 2017 gold production BUZWAGI 268,785oz 2017 gold production NORTH MARA 323,607oz 2017 gold production EXPLORATION NEAR-MINE/BROWNFIELD North Mara Gokona Underground mine life extensions Nyabirama underground resource extensions GREENFIELD West Kenya Kenieba JVs Project Nyanzaga JV Houndé Belt JVs 2017 SPEND ON OUR EXPLORATION PROJECTS US$25m (2016: US$24m) EAST AFRICA Our mines are located in Tanzania, the fourth largest gold producing country in Africa. We are also exploring in Kenya which has a nascent mining industry but highly prospective geology.

INTRODUCTION FROM THE CHIEF FINANCIAL OFFICER This report, the third we have produced of its kind, enables us to demonstrate not only how governments, but also local regions benefit from our

Jaco Maritz CHIEF FINANCIAL OFFICER Introduction We are delighted to publish our third Payments to Governments report as part of our commitment to running our business transparently and demonstrating

3 INTRODUCTION FROM THE CHIEF FINANCIAL OFFICER This report, the third we have produced of its kind, enables us to demonstrate not only how governments, but also local regions benefit from our operations. Jaco Maritz CHIEF FINANCIAL OFFICER Introduction We are delighted to publish our third Payments to Governments report as part of our commitment to running our business transparently and demonstrating the economic benefits that our host countries and stakeholders receive from our operations. This report includes all payments that Acacia and its subsidiaries make to Governments and is in line with the current UK Regulations governing the reporting of payments made by the extractive industry to Governments. Within the report we have broken out our overall contribution by country, mine and by project which enables each of our local stakeholders to see the benefits that both the regions around our operations receive as well as the central Government. In 2017, our overall contribution increased by 10% to US$202 million primarily due to a significant increase in net indirect taxes that are due to be refunded to the Company. Excluding the impact of the indirect taxes, we saw contributions to our host Governments fall by 12%, primarily due to the ongoing dispute in Tanzania which meant that sales of gold concentrate were significantly lower than the previous year and ultimately led to the decision to put the Bulyanhulu mine on reduced operations in the fourth quarter which meant that our overall production fell by 7% year on year. Over the past few years we have also expanded our business beyond Tanzania, with active exploration programmes now taking place across Kenya, Burkina Faso and Mali. Due to changes to the structure of our exploration projects in Burkina Faso and Mali, we are pleased to be able to show an element of our contribution to the countries for the first time. The majority of our contribution continues, however, to be made through joint ventures, where our partner holds the relevant project licences in their name and as such we are unable to report on their behalf. Whilst our contribution to the countries where we are exploring remains small, it is our hope that our interests in these projects will grow and progress over time, with resulting benefits to these countries in years to come. Structure of Regulations In this report, our disclosure is in line with the Reports on Payments to Governments Regulations which came into effect on 1 December 2014 and implemented Chapter 10 of EU Accounting Directive (2013/34/EU). We have also provided additional voluntary disclosure on a corporate level for indirect taxes, withholding tax, payroll related taxes, import duties and local government levies. The payments disclosed are based on where the obligation for the payment arose. Payments raised at a project level have been disclosed at a project level and payments raised at a corporate level have been disclosed on that basis. Payments made as a single payment, or as a related series of payments, that do not exceed 86,000 are not required to be disclosed, nevertheless we have elected to disclose these at a corporate level. All of the payments disclosed in the report have been made to National Governments, either directly or through a Ministry or Department of the National Government or alternatively through payments made to regional Government Departments. Jaco Maritz CHIEF FINANCIAL OFFICER Highlights REVENUE (US$ MILLION) US$752m 2016: US$1,054m 2017 TOTAL CONTRIBUTION TO GOVERNMENTS (US$ MILLION) US$202m 2016: US$184m TOTAL COMMUNITY RELATED SPEND (US$ MILLION) US$8.2m Amount spent in 2017 ACACIA MINING PLC 2017 PAYMENTS TO GOVERNMENTS REPORT 1

4 PAYMENTS TO GOVERNMENTS Acacia s 2017 payments to governments in line with chapter 10 of the Accounting Directive, the EU Regulations and certain related industry disclosures. For the year ended 31 December 2017 Production entitlements gold oz Income taxes Royalties Dividends Bonus payment Tanzania Operating projects Bulyanhulu gold mine 6,434 North Mara gold mine 35,667 25,998 Buzwagi gold mine 12,497 Exploration Nyanzaga project Exploration administrative Non-core exploration projects Corporate Dar es Salaam corporate office Total Tanzania 35,667 44,929 Kenya West Kenya Project West Kenya JV Advance Kenya administrative Total Kenya West Africa Burkina Faso Mali Total West Africa South Africa Johannesburg corporate office Total South Africa London corporate office Total Total 35,667 44,929 2 ACACIA MINING PLC 2017 PAYMENTS TO GOVERNMENTS REPORT

5 UK Regulations Voluntary Licence fees Infrastructure improvement projects Net Indirect Taxes Witholding Tax Payroll related taxes Import duties Local government levies Total ,084 2,232 19,180 1, , ,045 11,750 1,635 1,225 79, ,533 1,969 7,727 1, , ,838 4, ,008 7,246 43,724 4,415 2, , ,217 1, ,217 1, ,102 4, ,102 4, ,890 7,246 49,949 4,415 2, ,175 ACACIA MINING PLC 2017 PAYMENTS TO GOVERNMENTS REPORT 3

6 GLOSSARY OF TERMS Bonus payments These are payments for bonuses. Such payments are more common to the oil and gas industry whereby bonuses may be paid to a government upon signing an agreement or a contract, or when a commercial discovery is declared, or production has commenced or reached a milestone. Dividends These comprise dividend payments other than dividends paid to a government as an ordinary shareholder of an entity unless paid in lieu of production entitlements or royalties. Import duties These comprise all customs/excise/import and export duties. Typically, these taxes tend to become payable and are paid to governments at the point where goods are imported and exported from territories. These taxes form part of our operating and capital incurred costs. Income taxes This comprises any tax on the business calculated on the basis of its profits, income or capital gains. Typically, these taxes would be reflected in corporate income tax returns made to governments. Infrastructure improvement projects These are payments which relate to the construction of infrastructure (road, bridge or rail) not substantially dedicated for the use of extractive activities. Payments which are of a social investment in nature, for example building of a school or hospital, are excluded. Licence fees These include fees and other sums paid as consideration for acquiring a licence to gain access to an area where extractive activities are performed. Administrative government fees that are not specifically related to the extractive sector, or to access to extractive resources, are excluded. Also excluded are payments made in return for services provided by a government. Local government levies This comprises regional services levies paid to local government as outlined in the introduction to this report. Payroll related taxes These include PAYE, NSSF and PPF payments. PAYE represents payroll and employer taxes payable as a result of a company s capacity as an employer. Typically, these taxes would be reflected in payroll tax returns made to governments and tend to be payable, and are paid, on a regular basis (often monthly) throughout the year shortly after the submission of the return. These taxes form part of our operating costs. NSSF and PPF reflect social security and pension contributions we make to state run funds. Production entitlements These include a host government s share of production in the reporting period derived from projects we operate. This includes the government s share as a sovereign entity or through its participation as an equity or interest holder in projects within its home country. In certain contractual arrangements, for example production sharing contracts which are more common to the oil and gas industry, a government through its participation interest may contribute funding of capital and operating expenditure to projects, from which it derives production entitlement to cover funding costs. Royalties These comprise payments made to governments in the form of royalties. Typically these tend to become payable, and are paid, in the year to which they relate. These taxes form part of our operating costs. Net indirect taxes These comprise value added tax and other fuel levies or equivalent payments on goods and services we use within our operations (both domestic and international), less any refunds we may receive. Withholding tax These comprise taxes that are required to be withheld in advance on payments made to suppliers. Typically, these taxes would be reflected in income tax returns made to governments and tend to be payable, and are paid, on a regular basis (often monthly) throughout the year shortly after the submission of the return. 4 ACACIA MINING PLC 2017 PAYMENTS TO GOVERNMENTS REPORT

To find out more about Acacia please see one of the reports listed below.

7 MORE INFORMATION We produce a number of documents as part of our corporate communications. To find out more about Acacia please see one of the reports listed below. All reports can be found on our website: Annual Report & Accounts Corporate Brochure 2017 Sustainability Report

8 Acacia Mining plc 5th Floor No. 1 Cavendish Place London W1G 0QF Registered number: Investor Relations Giles Blackham Investor Relations Manager Phone: +44 (0) gblackham@acaciamining.com Registrars Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ Corporate Brokers J.P. Morgan Securities Ltd. 25 Bank Street Canary Wharf London E14 5JP RBC Capital Markets Thames Court 1 Queenhithe London EC4V 3DQ Auditors PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH Additional information regarding Acacia can be found on our website:

2016 Payments to Governments Report MAINTAINING OPEN AND TRANSPARENT DISCLOSURES

2016 Payments to Governments Report MAINTAINING OPEN AND TRANSPARENT DISCLOSURES ABOUT US Acacia Mining ( Acacia ) is Tanzania s largest gold miner and one of the largest producers of gold in Africa. We