Acacia Mining plc ( Acacia ) reports first quarter results

Transcription

1 20 April 2017 Results for the 3 months ended 31 March 2017 (Unaudited) Based on IFRS and expressed in US Dollars (US$) Acacia Mining plc ( Acacia ) reports first quarter results At an operational level Acacia had a very strong start to the year, with production of 219,670 ounces delivered from our mines and the declaration of a 1.3Moz maiden high grade resource in Kenya, said Brad Gordon, Chief Executive Officer. North Mara delivered strong production of 96,468 ounces, and it was pleasing to see the significant step up at Buzwagi to 59,856 ounces in the quarter whilst, as expected, Bulyanhulu had a slower start to the year with production of 63,346 ounces. All-in Sustaining Cost per ounce sold (AISC) was impacted by sales being almost 35,000 ounces lower than production primarily due to the restriction on the export of metallic mineral concentrates, but still amounted to US$934 per ounce sold (US$877 per ounce prior to the impact of share-based payment valuations), 3% lower than Q As announced previously, we continue to engage with the Tanzanian Government in order to be able to resume the export of gold/copper concentrate which has been halted since 3 rd March and accounts for approximately 30% of group revenues. Whilst these engagements are ongoing our mines continue to operate as normal and are stockpiling the gold/copper concentrate that has been produced. As a result, at this stage there is no change to guidance for the year. Operational Highlights Gold production of 219,670 ounces, 15% higher than Q Gold sales of 184,744 ounces, in line with Q1 2016, but 34,926 ounces lower than production primarily as a result of the Tanzanian Government s directive stopping the export of metallic mineral concentrate Cash cost 1 of US$577 per ounce sold,17% lower than Q AISC 1 of US$934 per ounce sold, 3% below Q1 2016, after a US$56 per ounce share-based payment valuation impact in Q For reference purposes, if Q1 sales ounces equalled Q1 production, AISC would have been approximately US$852 per ounce Buzwagi delivered production of 59,856 ounces, up 61% compared to Q with AISC decreasing to US$773 per ounce sold Maiden NI compliant Inferred Mineral Resource Estimate of 1.31 million ounces of gold at 12.1 grams per tonne declared on the Liranda Corridor within the West Kenya Project Financial Highlights Revenue of US$234 million, 6% higher than Q1 2016, as increased production from North Mara and a 6% increase in gold price has offset the impact of lower revenue from gold/copper concentrate sales EBITDA 1 of US$82 million, 25% higher than Q1 2016, mainly due to slightly higher revenues and lower direct mining costs Net earnings 1 of US$27 million (US6.5 cents per share), up from a US$52 million loss in Q and up 48% from Q on an adjusted basis Declared first provisional corporate tax payment of US$8.7 million for Q due to strong performance at North Mara Net cash decreased by US$22 million during Q to US$196 million, due to sales lagging production and indirect tax outflows Year ended 31 Dec Gold production (ounces) 219, , ,705 Gold sold (ounces) 184, , ,743 Cash cost (US$/ounce) AISC (US$/ounce) Net average realised gold price (US$/ounce) 1 1,221 1,150 1,240 (in US$'000) Revenue 233, ,909 1,053,532 EBITDA 1 82,193 65, ,388 Adjusted EBITDA 1 82,193 66, ,903 Net earnings/(loss) 26,827 (52,410) 94,944 Basic earnings/(loss) per share (EPS) (cents) 6.5 (12.8) 23.2 Adjusted net earnings 1 26,827 18, ,021 Adjusted net earnings per share (AEPS) (cents) Cash generated from operating activities 25,224 52, ,976 Capital expenditure 2 46,828 36, ,898 Cash balance 281, , ,791 Total borrowings 85, ,600 99,400 1 These are non-ifrs measures. Refer to page 15 for definitions 2 Excludes non-cash capital adjustments (reclamation asset adjustments) and include land purchases recognised as long term prepayments 1

2 Other Developments Export of metallic mineral concentrates As previously announced, on 3 March 2017, the Ministry of Energy and Minerals of the Tanzanian Government announced a general ban on the export of metallic mineral concentrates following a directive made by the President of the United Republic of Tanzania in order to promote the creation of a domestic smelting industry. Following the directive we ceased all exports of our gold/copper concentrate ( concentrate ) including the 277 containers that had been approved for export prior to the ban which are located in Dar es Salaam at both the port and a staging warehouse. The prevention of exports impacts Bulyanhulu and Buzwagi which produce gold in both doré and in concentrate form due to the mineralogy of the ore. North Mara is unaffected due to 100% of its production being doré. In 2016, the concentrate accounted for approximately 45% of Bulyanhulu s revenues and 55% of Buzwagi s revenues and at the group level accounted for approximately 30% of revenues. Acacia has been exporting concentrate from Bulyanhulu since 2001 and from Buzwagi since 2010 with all associated gold, copper and silver revenue declared. Whilst the proportion of gold in the concentrate is less than 0.02% it represents approximately 90% of the value of the concentrate, with copper representing approximately 10% of the value and silver less than 1%. Bulyanhulu and Buzwagi are permitted under Tanzanian law to sell their concentrate products to overseas customers and to export the concentrate in containers, and have been in full compliance with these laws and their export permits. Since the directive we have engaged extensively with key Government officials in order to come to a resolution that allows for exports to resume. As a long term investor in Tanzania we are fully committed to supporting local business and the Government s goal of economic growth, wealth creation and increased tax collection. To this end, we have offered to support the Government in a new study by third party experts to assess the economic potential of building a smelter in Tanzania capable of processing our concentrate as well as looking for a solution that addresses related issues. In early April, a Presidential Committee was formed, made up of academics and industry professionals, to investigate the contents of the concentrate containers in various locations in Tanzania. This team is due to report back to the President before the end of April and has visited both Bulyanhulu and Buzwagi as part of the process. Subsequent to quarter end, the President has formed a second committee to consider economic and regulatory issues relating to the export of metallic mineral concentrates from Tanzania. Since the directive we have continued to operate at Bulyanhulu and Buzwagi as normal and continue to stockpile concentrate at each of the sites. We have done this whilst taking a range of actions to help manage the significant financial impact of the deferral of sales, whilst ensuring we continue to safely operate the mines. We will re-assess the ongoing operation of Bulyanhulu and Buzwagi over the coming weeks due to the importance of concentrate as revenue for the two mines. The impact of the ban during the quarter has meant that we have approximately 30,000 ounces of gold in concentrate on hand, which was produced but not yet sold. This has negatively impacted cashflow by approximately US$33 million for the quarter. In addition we received approximately US$22 million in advanced payments for concentrate produced in January and February which is currently held up in the Dar es Salaam port and was awaiting export prior to the ban being announced. The advanced payments may need to be refunded during the second quarter if the export ban is not lifted. AISC was impacted on a unit cost basis, and had we sold all of the ounces produced, AISC for the quarter would have been approximately US$852 per ounce. Declaration of maiden high-grade Resource at West Kenya Project During Q we announced the maiden NI compliant Inferred Mineral Resource Estimate (MRE) on the Liranda Corridor, within our West Kenya Project. The Inferred MRE of 3.46 million tonnes at 12.1 grams per tonne for 1.31 million ounces is primarily located on three main zones of mineralisation at the Acacia prospect. The gold mineralisation at Acacia is associated with shear zones ranging in width from 0.5 metres to 10 metres (averaging 3 metres true width dependent on the zone), hosted by a mafic volcanic sequence. The strike lengths of the explored sections of the main mineralised zones at Acacia vary between 200 metres and 600 metres and the resource is currently defined down to a vertical depth of 750 metres with the structures open down plunge. An initial programme of approximately 45,000 metres of diamond core drilling is being undertaken during Q1-Q3 2017, with the objective of significantly increasing the Acacia prospect Inferred Resource, and at the same time producing an initial Inferred Resource on the Bushiangala prospect. We are targeting a significant increase in the Liranda Corridor Resource to over 2 million ounces prior to the end of We also plan to commence a scoping study in H to consider the potential for an underground mining operation. To increase the testing of the five main prospects in the Liranda Corridor we plan to increase the number of drill rigs operating from six to eight. Gokona Underground (North Mara) technical review update Due to the strong performance to date from the Gokona Underground at North Mara we commenced a technical review in late 2016 to better understand the near term grade profile as well as the longer term potential of the operation. This review is helping to guide the extensive drilling programmes that are underway to increase the life of the mine to at least 10 years. During the first quarter this drilling was limited to drilling adjacent to the defined stoping blocks at Gokona East Zone to test for continuity of higher grade mineralisation to 2

3 the Gokona Fault. Several significant high grade intercepts were returned including 59.9g/t Au from 46.0m incl. 204g/t Au from 49m and 64.7g/t Au from 37.0m incl. 453g/t Au from 45m. During the quarter we updated the Mineral Resource model using multiple indicator kriging (MIK) estimation methods to better represent the higher grade zones. The long term planning team are now evaluating this updated model, and reviewing the life of mine designs and infrastructure requirements. This process will be completed during the second quarter of 2017 and together with the results from the drilling programmes will form part of the full year reserve update process. For 2017, we have re-assessed the current reserve model in the East Zone and have applied a positive reconciliation factor of 26% to the stopes in this year s plan. This has therefore increased the full year mined grade in Gokona East from 9.6g/t to 11.8g/t, which includes ore development tonnes, and the overall mined grade (including Gokona West) for 2017 is therefore expected to be 8.4g/t. Notwithstanding this, our expectations for production for the year remain unchanged as we have also applied more conservative mining rate and productivity assumptions based on our experience to date and the rate of ramp up in both Gokona West and East. Minimum local shareholding and listing requirements for mining companies On 7 October 2016, the Mining (Minimum Shareholding and Public Offering) Regulations, 2016, made by the Minister for Energy and Minerals, were published. The Regulations impose two main obligations on holders of Special Mining Licences (SMLs), namely a 30% minimum local shareholding obligation and an obligation for SML holders to list on the Dar es Salaam Stock Exchange (DSE). In their current form, these Regulations require each of our operating entities that own Bulyanhulu, Buzwagi and North Mara to individually list on the DSE and offer 30% of their shares to Tanzanians for purchase. The original deadline stipulated for such offers was within 2 years of the date of the Regulations. However, we have been informed that this deadline has now been accelerated to 23 August This follows similar legislation introduced in Tanzania that required all Telecommunications companies operating in the country to be listed by 31 December 2016, although none has yet completed this process. In 2011, in an attempt to promote Tanzanian ownership, Acacia Mining plc obtained a cross-listing (being a form of secondary listing for foreign companies) on the DSE, further to commitments made at the time of Acacia s IPO in Whilst Acacia supports the attempt to build capital markets in Tanzania and the promotion of local ownership, we will be engaging with the Capital Markets and Security Authority (CMSA), the DSE, the Ministry of Energy and Minerals and all other relevant authorities in Tanzania during the second quarter with a view to finding a route forward that is both beneficial and practical for all stakeholders. Taxation update We have declared the first provisional corporate tax payment for 2017 relating to North Mara amounting to US$8.7 million. This has been offset against the indirect tax receivable under the Memorandum of Settlement entered into with the Tanzanian Government. During the quarter, we incurred approximately US$25 million in VAT outflows and received no VAT refunds. This was a result of the Tanzanian Revenue Authority and the Ministry of Finance undertaking audits of all VAT claims dating back to We believe that all VAT claiming businesses are subject to this audit, which remains ongoing. As a result, our total indirect tax receivables increased from US$136 million to approximately US$152 million during the quarter, of which approximately US$32 million is covered by the MOS, following the offset of North Mara corporate tax mentioned above. Resignation of Non-executive Director Peter Tomsett has informed the Company that he plans to step down from the Acacia Board of Directors following the Annual General Meeting later today due to personal circumstances. Following this change, the Acacia Board will comprise eight members, including 5 Independent Non-Executive Directors, two Non-Executive Directors and one Executive Director. Acacia will announce a replacement Senior Independent Director in due course. Acacia would like to thank Peter for his valuable commitment and support to the Company during his time on the Board and wish him all the best for the future. 3

4 Key Statistics Year ended 31 December Tonnes mined Kt 9,481 9,407 38,491 Ore tonnes mined Kt 3,216 2,445 9,419 Ore tonnes processed Kt 2,420 2,488 9,818 Process recovery rate exc. Tailings reclaim % 93.4% 89.6% 92.3% Head grade exc. tailings reclaim g/t Process recovery rate inc. tailings reclaim % 89.8% 88.9% 88.5% Head grade inc. tailings reclaim g/t Gold production oz 219, , ,705 Gold sold oz 184, , ,743 Copper production Klbs 4,656 3,803 16,239 Copper sold Klbs 2,487 3,681 14,745 Cash cost per tonne milled exc. tailings reclaim 1 US$/t Cash cost per tonne milled inc. tailings reclaim 1 US$/t Per ounce data Average spot gold price 2 US$/oz 1,219 1,183 1,251 Net average realised gold price 1 US$/oz 1,221 1,150 1,240 Total cash cost 1 US$/oz All-in sustaining cost 1 US$/oz Average realised copper price US$/lbs Financial results Year ended 31 December (Unaudited, in US$'000 unless otherwise stated) Revenue 233, ,909 1,053,532 Cost of sales (149,396) (171,900) (727,080) Gross profit 84,505 49, ,452 Corporate administration (6,642) (5,302) (21,895) Share based payments (10,424) (3,938) (29,929) Exploration and evaluation costs (6,778) (5,951) (24,020) Corporate social responsibility expenses (2,195) (2,870) (10,665) Other income (charges) (10,815) (608) 11,649 Profit/(loss) before net finance expense and taxation 47,651 30, ,592 Finance income ,512 Finance expense (2,238) (2,866) (11,047) Profit/(loss) before taxation 46,010 27, ,057 Tax credit/(expense) (19,183) (80,177) (147,113) Net profit/(loss) for the year 26,827 (52,410) 94,944 1 These are non-ifrs financial performance measures with no standard meaning under IFRS. Refer to Non IFRS measures on page 15 for definitions. 2 Reflect the London PM fix price. 4

5 For further information, please visit our website: or contact: Acacia Mining plc +44 (0) Brad Gordon, Chief Executive Officer Andrew Wray, Chief Financial Officer Giles Blackham, Investor Relations Manager Bell Pottinger +44 (0) Lorna Cobbett About Acacia Mining plc Acacia Mining plc () 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 core pillars; our business, our people and our relationships, whilst continuing to invest in our future. Our ambition is 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 is our majority shareholder. Acacia reports in US dollars and in accordance with IFRS as adopted by the European Union, unless otherwise stated in this report. Conference call A conference call will be held for analysts and investors on 20 April 2017 at 08:45 AM London time. The access details for the conference call are as follows: Participant dial in: Password: Acacia Mining A recording of the conference call will be made available on the Company s website,, after the call. FORWARD- LOOKING STATEMENTS This report includes forward-looking statements that express or imply expectations of future events or results. Forward-looking statements are statements that are not historical facts. These statements include, without limitation, 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 in this report. 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 including, the 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 report. Any forward-looking statements in this report only reflect information available at the time of preparation. Save as required under the Market Abuse Regulation or otherwise under applicable law, Acacia explicitly disclaims any obligation or undertaking publicly to update or revise any forward-looking statements in this report, whether as a result of new information, future events or otherwise. Nothing in this report 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 the historical published profits or earnings per share of Acacia. 5

6 Operating Review Acacia delivered production of 219,670 in Q1 2017, an increase of 15% compared to the prior year quarter, while AISC of US$934 per ounce sold and cash cost of US$577 per ounce sold were 3% and 17% respectively lower than Q For reference purposes, if Q1 sales ounces equalled Q1 production, AISC would have been approximately US$852 per ounce and cash costs would have been approximately US$551 per ounce. North Mara achieved gold production of 96,468 ounces for the quarter, 29% higher than in Q This was a result of a 31% higher head grade driven by the higher contribution from the Gokona underground mine and a resultant 3% improvement in recoveries. Gold ounces sold for the quarter of 93,740 ounces were 26% higher than the comparative quarter and broadly in line with production. AISC for the quarter saw a slight decrease to US$717 per ounce sold (Q1 2016: US$737/oz) as a result of the impact of increased sales volumes, partly offset by increased capitalised development costs, higher sustaining capital expenditure and a higher drawdown of ore inventory. Bulyanhulu produced 63,346 gold ounces, 19% lower than the comparative period but in line with plan. This was due to ounces produced from underground mining decreasing by 22% over Q1 2016, driven by a reduction in both ore tonnes and head grade. Lower underground mined grades were expected due to mine sequencing with reduced access to higher grade stopes. AISC per ounce sold for the quarter of US$1,229 was 25% higher than Q (US$983) mainly driven by the impact of lower sales ounces due to the lower production levels and the inability to export metallic mineral concentrates and higher cash costs mainly driven by increased external services. At Buzwagi, gold production of 59,856 ounces was 62% higher than Q due to a 64% increase in head grade as a result of higher grade delivered from the main ore zone at the bottom of the pit, compared to a generally lower mine grade in Q given focus on waste movement in the first half of AISC for the quarter of US$773 per ounce sold decreased by 38% compared to Q1 2016, mainly driven by the higher production base combined with lower sustaining capital expenditure, despite the significant lag in sales against production. Total tonnes mined during the quarter amounted to 9.5 million tonnes, in line with Q1 2016, as a result of a 24% increase in total tonnes mined at North Mara, offset by lower tonnes from Bulyanhulu and Buzwagi. Ore tonnes mined of 3.2 million tonnes were 32% higher than Q mainly due to higher ore tonnes from Buzwagi as a result of increased access to ore zones in the open pit in Q Ore tonnes processed amounted to 2.4 million tonnes, a decrease of 3% on Q1 2016, resulting from marginally lower throughput at all three sites. This was offset by a 11% increase in head grade primarily driven by a 31% higher head grade at North Mara driven by the higher contribution from the Gokona underground mine and a 64% increase in head grade at Buzwagi as a result of higher grade ore mined, driving production 15% higher compared to Q Cash costs of US$577 per ounce sold for the quarter were 17% lower than in Q1 2016, primarily due to: Higher production base (US$93/oz); and Higher capitalisation of development costs mainly at North Mara due to higher waste stripping at Nyabirama Stage 4 and at Bulyanhulu due to increased underground waste development activity (US$49/oz); offset by Higher contracted services costs at Bulyanhulu due to increased geology and contracted maintenance costs (US$40/oz). Included in cash cost, and ultimately cost of sales, is a credit of approximately US$15 million (US$81/oz) relating to the build-up in finished gold inventory due to concentrate sales delays which largely offsets the impact of the reduction in sales ounces in the cash cost per ounce sold calculation. All-in sustaining cost of US$934 per ounce sold for the quarter was 3% lower than Q1 2016, despite the lag in sales against production. This was driven by the lower cash costs (US$116/oz) (refer to above) partly offset by higher capitalised development costs at both North Mara and Bulyanhulu (US$49/oz) and the impact of a higher revaluation charge relating to future share-based payments compared to Q (US$35/oz). If our sales ounces equalled production, AISC for the quarter would have been approximately US$852 per ounce sold, compared to US$924 per ounce sold on the same basis in Q1 2016, a decrease of 8%. Cash generated from operating activities of US$25.2 million decreased by 52% from Q The inability to export our concentrate has had a negative impact on operating cash flow of approximately US$33 million. Working capital outflows mainly relating to increases in supplies inventory and indirect tax receivables further impacted cash generated from operating activities. Capital expenditure amounted to US$46.8 million compared to US$36.0 million in Q Capital expenditure primarily comprised of capitalised development and stripping (US$33.9 million), investment in fixed equipment and mining infrastructure mainly at Bulyanhulu (US$2.7 million), investment in mobile equipment and component change-outs mainly at North Mara (US$1.7 million) and land purchases at North Mara (US$1.2 million). 6

7 Mine Site Review Bulyanhulu Key statistics Year ended 31 December Key operational information: Ounces produced oz 63,346 78, ,432 Ounces sold oz 53,805 72, ,286 Cash cost per ounce sold 1 US$/oz AISC per ounce sold 1 US$/oz 1, ,058 Copper production Klbs 1,498 1,817 6,391 Copper sold Klbs 956 1,580 5,570 Run-of-mine: Underground ore tonnes hoisted Kt Ore milled Kt Head grade g/t Mill recovery % 91.4% 87.9% 91.4% Ounces produced oz 54,256 69, ,552 Cash cost per tonne milled 1 US$/t Reprocessed tailings: Ore milled Kt ,650 Head grade g/t Mill recovery % 47.5% 46.1% 45.8% Ounces produced oz 9,089 8,650 34,880 Capital Expenditure - Sustaining capital US$('000) 4,212 7,085 20,231 - Capitalised development US$('000) 16,070 13,168 63,082 - Expansionary capital US$('000) ,262 20,760 20,447 84,575 - Non-cash reclamation asset adjustments US$('000) 1,042 4,214 10,728 Total capital expenditure US$('000) 21,802 24,661 95,303 1 These are non-ifrs financial performance measures with no standard meaning under IFRS. Refer to Non-IFRS measures on page 15 for definitions. Operating performance Gold production amounted to 63,346 ounces, which was 19% lower than Q1 2016, but in line with plan. As guided, Q1 is expected to be the weakest quarter in 2017 at Bulyanhulu due to the impact of mine sequencing and lack of access to high grade stopes during the quarter. Production during the quarter was comprised of 30,787 ounces of gold in concentrate and 32,559 ounces of gold in doré. Gold sold for the quarter of 53,805 ounces, was 15% lower than production and 26% lower than Q mainly as a result of the lower production and the inability to export concentrate from early March. Copper production of 1.5 million pounds for the quarter was 18% lower than Q mainly driven by lower copper grades. Copper sold was 40% lower than Q1 2016, primarily due to the lack of exports of concentrate combined with lower copper production. Cash costs of US$786 per ounce sold were 19% higher than Q (US$661), mainly due to the impact of lower sales ounces on individual cost items combined with the lower production base (US$137/oz) and higher contracted services cost (US$90/oz), partly offset by higher capitalised development costs driven by higher waste development activity (US$43/oz) and lower sales related costs due to lower sales volumes (US$34/oz). Included in cash costs is a credit of approximately US$5.6 million (US$104/oz) relating to the build-up of finished gold inventory as a result of concentrate sales delays. AISC per ounce sold for the quarter of US$1,229 was 25% higher than Q (US$983) driven by the impact of lower sales ounces on individual cost items ($112/oz), higher cash costs ($125/oz) and higher capitalised development costs (US$54/oz), partly offset by lower sustaining capital expenditure ($53/oz). Capital expenditure for the quarter before reclamation adjustments amounted to US$20.8 million, in line with Q (US$20.4 million), as a decrease in sustaining capital expenditure (US$2.9 million) was offset by an increase in capitalised development (US$2.9 million). 7

8 Capital expenditure mainly consisted of capitalised underground development costs (US$16.1 million) and investment in fixed equipment and mining infrastructure including the West fan upgrade and underground ventilation raise boring (US$2.3 million). Buzwagi Key statistics Year ended 31 December Key operational information: Ounces produced oz 59,856 37, ,830 Ounces sold oz 37,199 37, ,202 Cash cost per ounce sold 1 US$/oz 694 1,171 1,031 AISC per ounce sold 1 US$/oz 773 1,246 1,095 Copper production Klbs 3,158 1,985 9,847 Copper sold Klbs 1,531 2,100 9,175 Mining information: Tonnes mined Kt 5,267 5,926 21,585 Ore tonnes mined Kt 2,053 1,303 5,317 Processing information: Ore milled Kt 1,076 1,128 4,404 Head grade g/t Mill recovery % 96.7% 94.3% 94.5% Cash cost per tonne milled 1 US$/t Capital Expenditure - Sustaining capital US$('000) 141 1,150 3,582 - Capitalised development US$('000) ,150 3,582 - Non-cash reclamation asset adjustments US$('000) (78) 1,421 4,524 Total capital expenditure US$('000) 63 2,571 8,106 1 These are non-ifrs financial performance measures with no standard meaning under IFRS. Refer to Non-IFRS measures on page 15 for definitions. Operating performance Gold production for the quarter of 59,856 ounces was 62% higher than in Q due to a 64% increase in head grade as a result of higher grade ore mined from the main ore zone at the bottom of the pit in Q as a result of the focus on waste movement in the first half of Production during the quarter was comprised of 40,002 ounces of gold in concentrate and 19,854 ounces of gold in doré. Gold sold for the quarter of 37,199 ounces, was 38% lower than production and in line with Q1 2016, primarily due to the inability to export concentrate from the beginning of March. Copper production of 3.2 million pounds for the quarter was 59% higher than the prior quarter period mainly due to increased copper grades. Copper sales decreased by 27% mainly due to the restrictions placed on the export of concentrate during the quarter. Cash costs for the year of US$694 per ounce sold were significantly lower than Q (US$1,171/oz), primarily driven by the higher production base (US$437/oz) and lower realised gold hedge losses (US$52/oz). Included in cash costs is a credit of approximately US$9.5 million (US$255/oz) relating to the build-up of finished gold inventory as a result of concentrate sales delays. AISC per ounce sold of US$773 was 38% lower than the Q (US$1,246/oz). This was mainly driven by the lower cash costs (US$477/oz) (refer to above) combined with lower sustaining capital expenditure ($27/oz). Capital expenditure before reclamation adjustments amounted to US$0.1 million, 88% lower than Q (US$1.2 million). Capital expenditure for the quarter consisted of the corrosion treatment of the process plant with the planned expansion of the tailings storage facility not yet started. 8

9 North Mara Key statistics Year ended 31 December Key operational information: Ounces produced oz 96,468 74, ,443 Ounces sold oz 93,740 74, ,255 Cash cost per ounce sold 1 US$/oz AISC per ounce sold 1 US$/oz Open pit: Tonnes mined Kt 3,854 3,114 15,556 Ore tonnes mined Kt ,752 Mine grade g/t Underground: Ore tonnes trammed Kt Mine grade g/t Processing information: Ore milled Kt ,830 Head grade g/t Mill recovery % 92.6% 90.2% 92.0% Cash cost per tonne milled 1 US$/t Capital Expenditure - Sustaining capital 2 US$('000) 6,256 2,378 28,317 - Capitalised development US$('000) 17,797 11,655 75,609 - Expansionary capital US$('000) 1, ,399 25,589 14, ,325 - Non-cash reclamation asset adjustments US$('000) 124 3,177 6,703 Total capital expenditure US$('000) 25,713 17, ,028 1 These are non-ifrs financial performance measures with no standard meaning under IFRS. Refer to Non-IFRS measures on page 15 for definitions. 2 Includes land purchases recognised as long term prepayments. Operating performance North Mara achieved gold production of 96,468 ounces for the quarter, 29% higher than in Q This was primarily a result of 31% higher head grade driven by the higher contribution from the Gokona underground mine and a resultant 3% improvement in recoveries. Gold ounces sold for the quarter of 93,740 ounces were 26% higher than the prior year quarter and broadly in line with production. Cash costs of US$410 per ounce sold were 15% lower than Q (US$484), mainly driven by the higher production base (US$58/oz) and higher capitalisation of development costs due to higher waste stripping at Nyabirama Stage 4 (US$76/oz), partly offset by an increased drawdown of ore inventory compared to Q (US$35/oz). AISC of US$717 per ounce sold was 3% lower than Q (US$737/oz) as a result of lower cash costs (US$74/oz) (refer above) and the impact of increased sales volumes (US$52/oz), partly offset by higher capitalised development costs (US$66/oz) and higher sustaining capital expenditure (US$41/oz). Capital expenditure for the quarter before reclamation adjustments of US$25.6 million was 81% higher than in Q (US$14.1 million). Key capital expenditure include capitalised stripping costs (US$13.4 million), capitalised underground development costs (US$4.4 million), capitalised drilling at Nyabirama underground (US$1.5 million) and investment in mobile equipment and component change-outs (US$1.2 million). In addition, US$1.2 million was spent on land acquisitions primarily around the Nyabirama open pit. Land acquisition costs are included in capital expenditure above as they are included in AISC but are treated as long term prepayments in the balance sheet. 9

10 Exploration Review Brownfield Exploration Significant brownfield programmes and budgets were approved for 2017 for North Mara to undertake surface and underground drilling activities at Gokona, Nyabirama, and Nyabigena. During the quarter there was limited underground drilling at Bulyanhulu but there will be a step up in drilling activity on the Reef 2 series through the rest of the year. North Mara Nyabirama The second stage of the surface diamond core drilling programme adjacent to the Nyabirama pit was completed during the quarter, and a subsequent programme of infill drilling was commenced. This drilling has been successful in showing the down-dip and downplunge extension of higher grade quartz-vein lode structures to a vertical depth of approximately 950 metres below surface and approximately 800 metres down-plunge to the south-west of the current open pit. Results received during the quarter include: NBD g/t Au from 397.0m 9.1 g/t Au from 428.0m NBD0149A 66.6 g/t Au from 873.0m incl. 198g/t Au from 874m 4.8 g/t Au from 890.0m NBD g/t Au from 592.0m incl. 280g/t Au from 594m NBD g/t Au from 997.0m, NBD g/t Au from 511.0m 4.6g/t Au from 537.0m 6.5g/t Au from 546.0m An initial block model is currently being developed incorporating the drilling completed to date to allow an assessment of the potential for an underground operation; whilst a programme of approximately 12,000 metres of diamond core drilling has commenced to infill the previous drilling to approximately 50 metre spacing. If the results of the infill programme are successful, they will be incorporated into a Mineral Resource model to form the basis for further studies on a potential underground exploration decline to further test the system and enable a smooth transition to underground production by the time of the completion of the open pit in Gokona Underground With underground development activity focused on delivering production stopes in Gokona West Zone, most of the drilling activity for the quarter was grade control diamond drilling to support those activities. The key drilling platform on the 1030mRL elevation continued to be developed during the quarter, with commencement of exploration drilling scheduled for the second quarter of Exploration activity during the first quarter was limited to some additional drilling adjacent to the defined stoping blocks at Gokona East Zone to test for continuity of higher grade mineralisation to the Gokona Fault. Several significant high grade intercepts were returned adjacent to the Gokona Fault extending the previously modelled mineralisation, including: UKGC_ g/t Au from 37.0m incl. 453g/t Au from 45m UKGC_ g/t Au from 46.0m incl. 204g/t Au from 49m UGKD_ g/t Au from 31.0m UKGC_ g/t Au from 36.0m UGKD_ g/t Au from 32.0m In the second quarter, underground diamond core drilling will test for the deeper fault offset extension of the Gokona East Zone mineralisation, test continuity of higher grade mineralisation beneath the existing open pit and immediately west of the Gokona Fault, commence drilling of the Gokona Central area below the open pit, and continue grade control drilling of Gokona West. The programme will comprise of approximately 75,000 metres of drilling over the next two years, with approximately 45,000 metres to be drilled in The aim of these programmes is to be able to increase the underground life of mine to at least 10 years. 10

11 Nyabigena An initial programme of approximately 10,000 metres of surface diamond core drilling commenced at the end of the first quarter at Nyabigena, with results pending on the first hole. This programme is designed to test the continuity of mineralisation below the existing open pit, better define offsetting fault structures, and enable more detailed metallurgical domaining of the deposit. Subject to the success of this programme and initial desktop study in 2017, further drilling is planned for 2018; after which a detailed study on the potential for development of an underground operation could be undertaken. Greenfield Exploration Kenya West Kenya Project During Q we announced the maiden NI compliant Inferred Mineral Resource Estimate (MRE) on the Liranda Corridor, within our West Kenya Project. The Inferred MRE of 3.46 million tonnes at 12.1 grams per tonne for 1.31 million ounces is primarily located on three main zones of mineralisation at the Acacia prospect. The gold mineralisation at Acacia is associated with shear zones ranging in width from 0.5 metres to 10 metres (averaging 3 metres true width; dependent on the zone), hosted by a mafic volcanic sequence. The strike lengths of the explored sections of the main mineralised zones at Acacia vary between 200 metres and 600 metres and the resource is currently defined down to a vertical depth of 750 metres with the structures open down plunge. In addition, we have identified mineralised zones on the Bushiangala prospect, approximately one kilometre away from the Acacia prospect. At this stage this material remains unclassified due to drill density and the need to further understand the controls on the mineralisation and its continuity. Recent results from the Bushiangala prospect include, 17.6g/t Au, 6.88g/t Au and 9.99g/t from step-out holes. Based on the work undertaken to date, the current scale of the mineralisation is between 0.60Mt and 1.50Mt at a grade between 6.0g/t Au and 10.0g/t Au, for a metal target of between 190,000 ounces and 290,000 ounces of contained gold. A key element of the 2017 drilling programmes at Bushiangala is to establish an Inferred Resource and to expand the scale of the targeted mineralisation. Since 2014 through to the time of the maiden resource announcement, the total drilling on Liranda Corridor targets amounted to 44 Reverse Circulation holes for 4,438 metres and 132 diamond core holes for 64,700 metres. During Q1 2017, a total of 29 diamond holes were completed or are underway for 16,708 metres, with three diamond core rigs drilling on Acacia and three drilling on Bushiangala. Current drilling on the Acacia prospect is targeting a significant expansion to the resource through testing up and down plunge extensions, as well as extensions along strike to the west. Drilling during the quarter continued to intersect significant high grade results from this drilling including results of: LCD0128* g/t Au from 302m, 19.0g/t Au from 552m, and 76.7g/t Au from 577m. LCD0130* g/t Au from 197m, LCD0132* g/t Au from 301m and 14.0g/t Au from 446.5m. 97.2g/t Au from 585.5m and 10.9g/t Au from 753.7m. 33.0g/t Au from 664.9m and 25.0g/t Au from 687m 26.0g/t Au from 200m and 22.6g/t Au from 214m, 11.7g/t Au from 441.6m and 15.1g/t Au from 482m. 16.1g/t Au from 708m, 14.5g/t Au from 561m. 28.5g/t Au from 270.7m. 12.5g/t Au from 132.9m and 39.1g/t Au from 251.4m. 7.56g/t Au from 457.2m and 6.40g/t Au from 558m 12.7g/t Au from 211.7m, 10.6g/t Au from 384m and 14.2g/t Au from 576.8m Note: * - holes included in maiden Inferred resource received during the quarter An initial programme of approximately 45,000 metres of diamond core drilling is being undertaken during Q1-Q3 2017; with the objective of significantly increasing the Inferred Resource on the Liranda Corridor to more than 2 million ounces. We also plan to commence a scoping study in H to consider the potential for an underground mining operation. In order to increase the testing of the five main prospects in the Liranda Corridor we also plan to increase the number of drill rigs operating from six to eight. 11

12 Burkina Faso During Q we continued to explore our properties in the highly prospective Houndé Belt in southwest Burkina Faso. Acacia currently has four joint ventures and an interest in over 2,700km 2 of prospective greenstone belt. Acacia manages all of the joint ventures. A major component of Q work programmes was to review the structural architecture of our land holdings and complete a target generation exercise using airborne aeromagnetic and radiometric data and ground IP geophysical data where available. These target generation layers are now being synthesised with our surface geochemical data layers to develop priority drilling targets. To date we have delineated more than 65 targets warranting follow-up by either mapping or reconnaissance drilling. South Houndé Joint Venture (Sarama Resources Limited) At the South Houndé JV project we continued field-based exploration activities focused both on resource extensions to the Tankoro Resource and regional exploration programmes searching for new discoveries. Acacia has taken over management of the South Houndé JV as of 1st January. During the quarter a total of 11,490 metres of Aircore drilling was completed on the Ouangoro prospect anomaly, 981 metres of RC pre-collars and 2,330 metres of diamond core tails were drilled into the Chewbacca and Yoda shoots on the MM Zone and into the Jabba shoot on the MC Zone structures at Tankoro. Mapping and surface sampling was conducted on the regional prospects. Tankoro - MM and MC Zones During the quarter we continued a programme of drilling to test the down-plunge extensions of higher grade gold mineralisation related interpreted cross structures at the MM and MC Zones within the Tankoro resource. A results based phased strategy has been adopted, cycling the rig between the Chewbacca, Yoda, Anakine and Jabba zones within the MM and MC parallel mineralised zones. All holes drill to date have intersected the targeted porphyries and cross structures, however, the high-grade shoots are either lower grade than expected, or of shorter strike extend that expected. The current phase of drilling continues to target interpreted high grade domains associated with cross-structures and is applying the learnings from the initial holes. Results for MM Zone drilling are pending and expected to be received during Q2 2017, with visually encouraging zones observed in drilling to date. RC and diamond core drilling elsewhere on the Tankoro Corridor will be focused on additional drilling on the northeast extension of the mineralised system at the Phantom East prospect. Additionally, we plan to undertake diamond core drilling at the Guy prospect, which is a multi-kilometre gold soil anomaly occurring at the intersection of the Tankoro Corridor (NE strike) and the Guy Corridor (north-south structure) Ouangoro Anomaly Aircore drilling commenced at the beginning of February on the Ouagoro Anomaly with the plan to drill 19 regional 1 kilometre spaced traverses across a 15 kilometre x 4 kilometre zone of semi-continuous gold-in-soil geochemical anomalism along an interpreted NNEtrending linear geophysical anomaly. To date 10 traverses have been drilled for 11,490 metres advance, with results for first four traverses received at quarter-end. Positive results have been returned from all four traverses including better results of 0.51g/t Au from 46m, 0.67g/t Au from 28m (including 3.09g/t Au), 0.86g/t from surface (including 2.32g/t Au), 0.26g/t Au from 8m and 0.61g/t Au from 6m (including 1.69g/t Au). Mineralisation in drilling and observed in artisanal workings is typically associated with quartz veins in weathered greywacke, siltstone and sandstone lithologies. It is anticipated that infill Aircore drilling (400m spaced) will be completed as Phase 2 of the programme once all results are received and interpreted. Central Houndé Joint Venture (Thor Explorations Limited) Surface geochemical sampling undertaken over the past 18 months has identified several very encouraging zones of gold anomalism coincident with the interpreted Legue-Bongui structural corridor, including an 8km x 2km anomalous gold zone. During the quarter we completed a structural targeting exercise, reviewed the surface gold anomalies from soil sampling, and undertook multi-element geochemical analysis of all samples, using a portable XRF, from the regional soil sampling programmes. As a result of this targeting exercise we delineated 35 targets across the Central Houndé project area, and we commenced field validation, geological mapping and further surface sampling programmes on priority target areas. During Q2 2017, we plan to continue review of our current targets and commence RC drilling in early May of a number of regional targets already reviewed with programmes designed. 12

13 Pinarello & Konkolikan Joint Venture (Canyon Resources Limited) Surface geochemical sampling undertaken over the past two years has identified several very encouraging zones of gold anomalism coincident with the interpreted structural corridors, magnetic features and surface IP geophysical anomalies. During the quarter we completed a structural targeting exercise, reviewed the surface gold anomalies from soil sampling, and undertook multi-element geochemical analysis, using a portable XRF, of all samples from the regional soil sampling programmes. As a result of this targeting exercise we delineated 28 targets across the Pinarello project area, and we commenced field validation, geological mapping and further surface sampling programmes on priority target areas. Throughout the quarter we continued Aircore drilling with 227 Aircore holes drilled for 11,549 metres on three wide spaced traverses over a strike distance of 2km of the 8km x 3km Tangalobe prospect. The objective of the drilling programme is to test gold-in-soil anomalies that are coincident with anomalous termite mound results and interpreted structural/magnetic targets. The geology of the area is characterised by sedimentary sequences. There is a prominent shear zone striking at ~040 and moderately-steeply dipping towards southeast. Quartz float is ubiquitous in the area of drilling. Potential mineralised zones in the holes drilled so far are associated with oxidized quartz veins and haematite alteration. Partial assay results have been received to date with better results including: 1.64g/t Au from 49m, 6.0g/t Au from 57m, 0.77g/t from 29m, 0.72g/t Au from 5m, 1.02g/t Au from 44m, 0.60g/t Au from 31m and 1.33g/t Au from 44m. Acacia has now earned 75% equity in the project and we have therefore entered the contributory/dilution phase of the JV agreement. Programmes for Q include field RC drilling, Aircore drilling, geological mapping, prospect reviews, further infill soil sampling and trenching. Frontier JV Regional regolith and geological mapping has been completed for both licences that make up the JV. A regional 800m x 400m reconnaissance soil sampling programme and termite mound, rock chip and quartz lag sampling programmes have been completed. A total of 7,195 samples were collected. Approximately two third of assay results had been received by the end of the quarter. Interpretation of preliminary gold assays and litho-structural information from regolith mapping and aeromagnetic surveys has resulted in an initial 12 regional targets being defined for follow-up work. The Q programme includes field validation of delineated soil anomalies, infill soil sampling and regolith / geological mapping. It is anticipated several traverses of Aircore drilling will be completed across high priority target areas from the structural targeting combined with gold-in-soil anomalies. Tanzania Nyanzaga During the quarter OreCorp Limited published the results of the Pre-Feasibility Study ( PFS ) on the Nyanzaga Project. The PFS, led by Lycopodium Minerals Pty Ltd of Perth, Western Australia, delivered an optimal development scenario of a 4Mtpa concurrent open pit ( OP ) and underground ( UG ) operation for pre-production capital costs estimate of US$287M, which includes a US$33M contingency. The concurrent mining schedule significantly reduced the low grade stockpiling scenario considered in the Scoping Study and increased the OP contained ounces and life of mine ( LOM ) average mineralised material grade processed from 1.9 g/t gold in the Scoping Study to 2.0 g/t (+5%). Based on the PFS, the Project is expected to deliver an average gold production of 213koz per annum over a 12 year LOM, peaking at 249koz in Year 3 and totalling approximately 2.56Moz of gold produced over the LOM. The AISC and AIC are estimated to be US$838/oz and US$858/oz respectively over the LOM. Acacia and OreCorp have agreed the scope of the Definitive Feasibility Study ( DFS ) and this has commenced early in the second quarter. The DFS will focus on optimising the OP and UG schedules; metallurgy and comminution aimed at maximising metallurgical recoveries, reagent and power consumption; and confirming detailed plant design. 13