LSE:ACA. Acacia Mining plc. A leading African business. November 2016

Transcription

1 LSE:ACA Acacia Mining plc A leading African business

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 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 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 2015 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. 2

3 Investment Case Focused on free cash flow generation and long term value creation Consistently delivering across our portfolio of operations Increased production guidance at Q3 results to 5% above top end of previous range (~820koz) AISC of US$896/oz year-to-date, prior to non-cash revaluation of RSUs (US$961/oz inc. RSUs) Generating strong cash flow and adding cash to the balance sheet Doubled net cash to US$203 million year-to-date Cash position of US$302 million Continuing to investing in our future Focused on value enhancing brownfields extensions at Bulyanhulu and North Mara Delivering greenfields exploration success across expanded exploration footprint Remain disciplined with capital allocation Focus on cash flow ahead of ounces Prioritising shareholder returns via progressive dividends, 43% increase in interim dividend 3

4 Company Overview A leading African asset portfolio with a high-grade R&R of 28.6Moz Our Locations Business Overview High-grade open pit / UG mine North Mara 9 year life of mine West Kenya JV Kenya Cornerstone of FCF generation World class resource nearing Bulyanhulu geological potential Tintinba Project Mali Houndé Belt JVs Burkina Faso North Mara Tanzania Bulyanhulu Tanzania Buzwagi Tanzania Buzwagi Life of mine in excess of 20 years Low-grade bulk deposit Short life mine, harvest mode FCF positive Nyanzaga Project Tanzania Focused, contrarian view on Exploration exploration Producing mines Exploration properties Building pan African portfolio 4

5 Company Snapshot Senior Management Brad Gordon Andrew Wray Mark Morcombe Peter Spora Deo Mwanyika Peter Geleta Chief Executive Officer Chief Financial Officer Chief Operating Officer Head of Exploration Head of Corporate Affairs Head of People Top Shareholders Barrick Gold 63.9% Blackrock 6.2% M&G 4.3% Franklin Templeton 1.9% Ruffer 1.1% Paulson 1.0% Capital Structure Analyst Coverage No. of shares in issues 410.1m Share price (p) (1) 527 Market Capitalisation (GBPm) 2,161 Market Capitalisation (US$m) 2,637 Cash balance (US$m) 302 Total debt (US$m) 99 Enterprise Value (US$m) 2,434 No. of Analysts 21 Buys 10 Holds 7 Sells 4 Average target price 560p 1) As at 28 th October 2016 USD:GBP rate of

6 AISC (US$/oz) Transformed cost profile in last 4 years Reduced AISC by ~50% without significant tailwinds from FX or oil AISC 1,800 Progression 1,500 1,561 1,200 1, ,105 1, YTD AISC (pre share based payments) Share based payments 6

7 Our Business

8 North Mara Tanzania A leading asset in Africa, driving free cash flow High-grade open pit and underground mine comprising two deposits: Gokona converted open pit to underground operations in mid 2015 Driving step up in production rates due to strong grades (23g/t in Q3) Nyabirama - open pit with U/G potential On track to deliver 5 th successive year of production increases Production (koz) Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 AISC per ounce sold (US$/oz) Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Visible gold in ore from Gokona Underground 8

9 300m 300m North Mara Brownfield Growth Targeting extensions of mineralisation beyond current final designs Gokona Underground Extensions Nyabirama Underground Potential Cut 4 Pit outline Hanging Wall Lode Footwall Lodes Existing holes beneath Cut drilling programme underway Approximately 930koz of resource beneath current reserves Infill, lateral and deeper drilling will commence in 2017 to extend and upgrade this 2016 drilling programme started in Q2, designed to extend mineralisation at depth Positive results have led to extension of drilling programme 9

10 Bulyanhulu - Tanzania Continuing the transformation World class 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 Expect 2016 to be the highest production since 2006 as mine starts to deliver on potential AISC has fallen to below US$1,000/oz as changes to mine take effect Q3 saw impact of planned shaft and mill shutdown full year expectations are unchanged Ramping production to +300kozpa over the coming years Production (koz) Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 AISC per ounce sold (US$/oz) 1,453 1,373 1,278 1, Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 * Including produced ounces 10

11 Bulyanhulu Brownfields Growth Testing expansion of a world class resource to unlock potential parallel operation Reef 1 Reef 2M Reef 2M Phase 4 Drilling Phase 3 Drilling 11

12 Buzwagi - Tanzania Operating in harvest mode and delivering free cash Bulk tonnage open pit mine Final cut back of open pit scheduled to complete in H Followed by 2 years of processing stockpiles Q4 due to be strongest quarter of year as we re-enter higher-grade zone Put in place zero cost collars to protect downside risk given short life of mine Investigating mine life extension and future options for the asset Production (koz) Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 AISC per ounce sold (US$/oz) 1,394 1,236 1,246 1,118 1,065 1,019 1,076 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q

13 Our Future

14 Investing in Our Future We continue to be contrarian in our view on exploration and our approach is beginning to deliver results Created portfolio of over 6,000 square kilometres across prospective greenfield geology in last few years Six earn-in agreements across East and West Africa More than 50 regional targets 12 rigs drilling greenfields projects across three countries post wet season Targeting high value discoveries of >3Moz 2016 budget of US$20 million Tintinba Project Mali Houndé Belt JVs Burkina Faso Nyanzaga Project Tanzania West Kenya JV Kenya North Mara Tanzania Bulyanhulu Tanzania Brownfield projects Greenfield projects 14

15 Kenya West Kenya Project Broad initial exploration programmes focused on identifying potential new deposits within ~1,600sqkm land package Project acquired in late 2012 from a junior Undertaken grass roots exploration across the land package Near 3 rd city in Kenya, Kisumu, with good access to roads, water and power Focus now primarily on the Liranda Corridor due to consistent high grade results Recently increased ownership to 100% of main licence areas 15

16 Kenya Liranda Corridor Key focus area as continues to deliver high grade results Potential analogue system to East Kundana in Western Australia 16

17 Liranda Corridor delineated three high grade lodes to date Currently have 6 rigs drilling Completing a 40km programme in 2016 Expect initial inferred resource in Q Looking at high-grade underground deposit 17

18 Burkina Faso - Houndé Belt JV progress Multiple structural domains with extensive surface gold anomalies currently being delineated Continue to identify significant gold potential in the Houndé Belt 75+ kilometres of strike of prospective geology with known gold corridors Projects cover regional structures associated with known gold deposits and numerous prospects Surface gold anomalies up to 5g/t identified on the Central Houndé JV Early positive results from Aircore drilling on the Pinarello project Continued high grade intercepts along the Tankoro Trend on the South Houndé JV project Signed a fourth JV, the Frontier JV in July 2016, which is contiguous the with Pinarello licences Acacia now holds approximately 2,700sqkm of licences and applications under JV 18

19 Nyanzaga Tanzania JV High-grade project in pre-feasibility study Entered into earn-in JV with OreCorp in September 2015, who will manage and fund Nyanzaga for 3 years through to DFS for a 25% interest for a spend of $15m OreCorp may subsequently increase interest to 51% depending on NPV Updated JORC resource extends from surface to approximately 800m vertically below surface with mineralisation open at depth Metallurgical testing indicates high recoveries of 86 92% Scoping study completed in August, key results are: Combined open pit and underground operation Production of 2.4Moz over a 13 year life Average AISC of US$798/oz Pre-production capital of US$248 million (inclusive of contingency). Moved into pre-feasibility study based on positive results Resources (OreCorp, August 2016) Tonnes Au Grade Au Contained (Mt) (g/t) (koz) Measured Indicated ,416 Sub-Total M & I ,772 Inferred Total ,344 19

20 Our Relationships

21 Tanzania Stable Investment Jurisdiction Western Sahara Morocco 24/109 Mauritania Mali 52/93 65/109 Policy Perception Index Algeria Tunisia Niger Senegal 103/109 Gambia Burkina Faso Guinea Guinea-Bissau 44/109 97/109 Benin Ivory Nigeria Sierra Leone Ghana Coast Liberia 60/109 52/109 Togo Cameroon Risk Metrics (2015) Control Risks Political Risk Assessment Low Medium High Extreme Equ. Guinea Gabon Congo Libya Chad Central African Republic Angola 92/109 Namibia 29/109 x/109 = Fraser Institute Mining Policy Potential Index Botswana 14/109 South Africa 78/109 Ethiopia 48/109 Uganda Kenya 84/109 Rwanda Burundi Malawi Zimbabwe 106/109 Swaziland Lesotho Mozambique 79/109 Source: Control Risks, Fraser Institute Annual Survey of Mining Companies: 2015 DRC 87/109 Egypt 77/93 Zambia 61/109 Sudan Tanzania 63/109 Djibouti Somalia Comoros Mayotte Madagascar 76/109 Mining in Tanzania In Tanzania, mining contributes 3.5% of the GDP Targeted to reach 10% of the GDP by 2025 The sector accounts for ~43% of Tanzania s export revenues Tanzania is 4th largest gold producer in Africa Each Acacia Group operating mine has an MDA with the Tanzanian Government The material terms include provisions governing royalty payments, taxes, and import rights Notable investments into power generation capacity through gas, wind power, coal and hydroelectric power Average annual wage in the mining industry: $1,000 Gold royalties: 4% Corporate tax: 30% Other Resource Companies in Country 21

22 Enhancing our relationships Over US$12m of investment in community projects near our sites in 2016 and contributed US$889m to the Tanzanian economy in 2015 (~2% of GDP) Infrastructure Bridge to provide year round access to markets for farmers Livelihoods Tools to support co-operative setting up a motorbike maintenance business Livelihoods Bee-keeping project for 120 youths 22

23 Continuing to localise our operations Identifying and promoting local talent Reduced number of expatriates on our mines by over 50% whilst delivering 3 years of increased production Promoted Tanzanians to senior managerial levels Buzwagi has only 10 expats out of a workforce of 1,000 Core Training programmes Rainbow Gold Training Program for our First Line Leaders Top 300 completed Tufanikiwe Pamoja Cultural Change Program Business Acumen Training Reinforcing Accountable Management System Proportion of National Employees 98% 97% 96% 95% 94% 94% 93% 93% 92% 91% 91% 90% 89% 97% 88%

24 Outlook

25 EUS/$ million 2016 Outlook Increased production guidance to 5% above top of original range Production (koz) ~ Cash cost per ounce sold (US$/oz) ~ E AISC per ounce sold (US$/oz) 1,500 1,561 1,300 1,346 1,100 1,105 1, ~950 Capital Expenditure (US$ Million) ~ E E 25

26 Our Vision Where we see the business in 5 years Industry leading free cash flow yield Twin underground mines at North Mara with LoM maintained at 10 years Bulyanhulu delivering to its geological potential Expanded land package across Africa delivering high quality projects One mine in construction One project in feasibility 26

27 Appendix Operating Metrics Reserves & Resources Mine Site Aerial Views

28 Key Metrics Three months ended 30 September Nine months ended 30 September Unaudited Q Q YTD 2016 YTD 2015 Gold production (ounces) 204, , , ,189 Gold sold (ounces) 206, , , ,586 Cash cost (US$/ounce) AISC (US$/ounce) , ,153 Net average realised gold price (US$/ounce) 1 1,330 1,113 1,250 1,172 (in US$'000) Revenue 284, , , ,463 EBITDA 1 124,825 20, , ,341 Adjusted EBITDA 1 122,125 20, , ,750 Net earnings/(loss) 52,787 (13,053) 46,659 1,712 Basic earnings/(loss) per share (EPS) (cents) 12.9 (3.2) Adjusted net earnings/(loss) 1 50,898 (13,063) 109,665 4,798 Adjusted earnings/(loss) per share (AEPS) (cents) (3.2) Cash generated from operating activities 99,947 4, , ,355 Capital expenditure 2 52,900 51, , ,686 Cash balance 302, , , ,373 Total borrowings 99, ,800 99, ,800 1 These are non-ifrs measures. 2 Excludes non-cash capital adjustments (reclamation asset adjustments) and includes finance lease purchases and land purchases recognised as long term prepayments 28

29 Q Operating Metrics Bulyanhulu* North Mara Buzwagi Group** Q3 16 Q3 15 Q3 16 Q3 15 Q3 16 Q3 15 Q3 16 Q3 15 Key operational information: Ounces produced oz 52,504 62, ,523 67,738 39,699 33, , ,888 Ounces sold oz 53,764 64, ,440 69,395 39,284 33, , ,116 Cash cost per ounce sold US$/oz , AISC per ounce sold US$/oz 1,300 1, ,076 1, ,195 Copper production Klbs 1,157 1, ,400 1,528 3,557 2,993 Underground: Ore tonnes trammed/hoisted Kt Open Pit / TSF Reclaim Tonnes mined Kt - - 4,140 3,922 5,072 6,523 9,212 10,445 Ore Tonnes mined Kt ,203 1,518 1,858 2,305 Processing information: Ore milled Kt , ,932 1,888 Head grade g/t Mill recovery % 85.9% 87.8% 92.8% 88.7% 94.4% 93.6% 91.5% 89.4% *Bulyanhulu processing information represent ROM only Tailings reprocessing statistics are as follows: Q3 16 Ore Milled 1.5g/t, recoveries of 44.3% for 8,843 ounces recovered. Q3 15 Ore Milled 1.2g/t, recoveries of 45.4% for 7,384 ounces recovered ** Group figures for ore milled, ore mined, head grade and mill recovery exclude reclaimed tailings material 29

30 YTD 2016 Operating Metrics Bulyanhulu* North Mara Buzwagi Group** YTD 16 YTD 15 YTD 16 YTD 15 YTD 16 YTD 15 YTD 16 YTD 15 Key operational information: Ounces produced oz 209, , , , , , , ,189 Ounces sold oz 204, , , , , , , ,586 Cash cost per ounce sold US$/oz ,030 1, AISC per ounce sold US$/oz 1,057 1, ,108 1, ,153 Copper production Klbs 4,684 4, ,300 5,951 11,984 10,485 Underground: Ore tonnes trammed/hoisted Kt Open Pit / TSF Reclaim Tonnes mined Kt ,374 10,977 16,495 19,416 27,869 30,393 Ore Tonnes mined Kt 1, ,050 2,394 3,808 4,226 5,858 6,620 Processing information: Ore milled Kt ,137 2,128 3,245 3,025 6,052 5,867 Head grade g/t Mill recovery % 91.3% 88.4% 91.9% 87.8% 94.5% 93.8% 92.2% 89.4% Bulyanhulu mining and processing information represent ROM only Tailings reprocessing statistics are as follows: YTD 16 Ore Milled 1.5g/t, recoveries of 45.3% for 25,829 ounces recovered. YTD 15 Ore Milled 1.2g/t, recoveries of 56.6% for 22,159 ounces recovered ** Group figures for ore milled, ore mined, head grade and mill recovery exclude reclaimed tailings material 30

31 Appendix Operating Metrics Reserves & Resources Mine Site Aerial Views

32 Reserves and Resources Tonnes (000's) 2015 YE 2014 YE Grade Au (g/t) Ounce (000's) Tonnes (000's) Grade Au (g/t) Ounce (000's) Bulyanhulu Proven & probable (U/G) 20, ,925 29, ,225 Proven & probable (Tailings) 6, , Mineral Resource (U/G) 22, ,010 12, ,385 Inferred (U/G) 19, ,903 13, ,367 Buzwagi Proven & probable (Surface/Stockpiles) 14, , Mineral Resource 44, ,911 48, ,017 Inferred 3, , North Mara Proven & probable (U/G) 3, , Proven & probable (Surface/Stockpiles) 19, ,294 21, ,531 Mineral Resource (total) 12, ,083 17, ,659 Inferred (total) 4, , ,048 Exploration Proven and probable Mineral Resource 105, , , ,812 Inferred 4, , Total* Proven & probable 65, ,750 83, ,475 Mineral Resource 184, , , ,873 Inferred 32, ,987 32, ,793 Reserves and Resources estimates calculated in accordance with NI Reserves calculated at US$1,100/oz, Mine Resources at US$1,400/oz and Exploration resources at US$1.500/oz 32

33 Appendix Operating Metrics Reserves & Resources Mine Site Aerial Views

34 Bulyanhulu: Aerial View Waste Rock Storage Shaft Camp Airstrip Process Plant Tailings Storage 34

35 North Mara: Aerial View Gokona Gokona Gokona O/P & U/G Nyabirama Airstrip Nyabirama Raw water dam Nyabirama O/P Nyabigena (closed O/P) TSF Process Plant 35

36 Mine site Buzwagi: Aerial View Water Storage ROM Pad Process plant Water harvest TSF Camp Pit Waste Rock storage 36