Acacia Mining plc ( Acacia ) reports full year 2014 results

Transcription

1 16 February 2015 Results for the 12 months ended 31 December 2014 (Unaudited) Based on IFRS and expressed in US Dollars (US$) Acacia Mining plc ( Acacia ) reports full year 2014 results 2014 was a watershed year for Acacia as we returned to free cash generation for the first time since 2011, exceeding our initial production guidance and reducing all-in sustaining costs (AISC) year-on-year by 18%. Coupled with this we completed our rebranding to reflect our new approach to running the business, set out our five year plan for the Company and expanded our footprint into West Africa, said Brad Gordon, Chief Executive Officer of Acacia Mining. We have continued to deliver operationally and demonstrated consistent cost control which has meant that we have now exceeded the planned savings set out by the Operational Review 18 months ago. For 2015 we expect a further increase in production to 750,000 to 800,000 ounces of gold, predominantly in the second half, at reduced AISC of US$1,050 to US$1,100 per ounce sold driven by further operational improvements and the planned ramp up at Bulyanhulu. Full Year Financial Highlights Revenue of US$930 million in line with 2013, as increased ounces sold offset the lower gold price EBITDA 1,3 of US$253 million, 5% higher than 2013, impacted by non-cash charges of US$27 million Net earnings 3 of US$90 million (US22.1 cents per share) Operational cash flow increased to US$290 million, a 55% increase on 2013 Cash position increased by US$11 million to stand at US$294 million as at 31 December 2014 Capital expenditure of US$254 million, 34% lower than 2013 due to revised mine plans and stringent capital controls Proposed final dividend of US2.8 cents per share, total dividend for 2014 of US4.2 cents per share, up 40% on 2013 Full Year Operational Highlights Gold production of 718,651 ounces, 13% higher than 2013, with gold sales of 703,680 ounces AISC 1,2 of US$1,105 per ounce sold, 18% lower than 2013 Cash costs 1,2 of US$732 per ounce sold, 10% lower than 2013 Operational Review cost reductions of US$185 million delivered as planned Bulyanhulu CIL Expansion project fully commissioned in the fourth quarter Gokona Underground project approved by the Board and moving ahead into execution phase 2.3Moz of resources added at Bulyanhulu as a result of drilling programmes Greenfield exploration progressed well with continued positive results in West Kenya and entry into Burkina Faso Three months ended 31 December Year ended 31 December (Unaudited) Gold production (ounces) 181, , , ,002 Gold sold (ounces) 194, , , ,597 Cash cost (US$/ounce) AISC (US$/ounce) 1 1,088 1,163 1,105 1,346 Average realised gold price (US$/ounce) 1 1,194 1,251 1,258 1,379 (in US$'000) Revenue 243, , , ,004 EBITDA 1,3 45,260 44, , ,407 Net earnings/(loss) 3 21,136 (97,700) 90,402 (781,101) Basic earnings/(loss) per share (EPS) (cents) (23.8) 22.1 (190.4) Cash generated from operating activities 3 60,993 48, , ,115 Capital expenditure 3,4 57,807 91, , ,068 1 These are non-ifrs measures. Refer to page 25 for definitions comparative amounts have been restated to exclude Tulawaka 3 EBITDA, net earnings, earnings per share, cash generated from operating activities and capital expenditure include continuing and discontinued operations 4 Excludes non-cash capital adjustments (reclamation asset adjustments) and includes finance lease purchases 1

2 CEO Statement I am delighted with the progress we have made across the business over the last twelve months. We continued to deliver operationally, with each quarter showing lower all-in sustaining costs. This discipline enabled us to return to free cash generation, for the first time since 2011, which was one of our key objectives for the year. Our continued operational improvement was driven by a fresh approach to running the Company focused on three key pillars: Our Business, Our People and Our Relationships. In order to further embed and reflect this approach, our shareholders voted to change the Company s name to Acacia Mining plc from African Barrick Gold plc on 26 November. Our ambition is that, through the adoption of this new name, all of our people and external stakeholders become aligned with our new approach and goal of becoming a leading African mining company. We have already seen evidence that this is happening as the new approach is put into action. During 2014 we continued to enhance our mines and approved the development of an underground operation at North Mara which will significantly improve both the economics of the mine and the social situation in the area. We are continuing to turn Bulyanhulu into a world class mine and during the year engaged contractors to accelerate underground development to provide future flexibility as well as pouring the first gold from the CIL Plant Expansion at the mine. With a contrarian approach we took advantage of the dislocation in the market to expand our exploration footprint, and in November expanded into West Africa through an exciting and highly prospective exploration project in Burkina Faso. Year in Review 2014 was a successful year for Acacia, with production increasing again to 718,651 ounces, 13% higher than 2013 and 4% above the upper end of our initial guidance range for the year. Production increased at all three mines with Bulyanhulu up 18% on 2013, Buzwagi up 15% on 2013 and delivering its highest ever year of gold production and North Mara remaining the standout performer, producing 273,803 ounces as the grade from the Gokona pit continued to be strong. On the cost side, we demonstrated consistent cost control and have now taken US$600 per ounce out of our quarterly all-in sustaining costs ( AISC ) since Q This translated into full year AISC of US$1,105 per ounce sold, down 18% on 2013 and at the bottom of our guidance range. We delivered on our targeted cost savings of US$185 million set out in the Operational Review in 2013 and our continued focus is on removing further costs from the mining cycle. As a result of the cost savings, cash costs per ounce continued to come down and for 2014 we delivered cash cost per ounce sold of US$732, below our guidance range and 10% lower than We returned to cash generation for the first time in three years during 2014, adding US$11 million to the balance sheet. Whilst this is positive, it does not reflect the scale of change that took place during the year, with positive cash flows of more than US$100 million before growth capital, dividends and Tulawaka sale costs. It should be noted that the average realised gold price of US$1,258 per ounce was over US$100 per ounce lower than 2013 and over US$400 per ounce lower than 2012, years in which we did not generate positive free cash flow. Total revenue for the year amounted to US$930.2 million which was in line with 2013 despite the lower average realised gold price as sale ounces for 2014 exceeded prior year sales by 9%. EBITDA increased by 5% to US$252.7 million in 2014 mainly due to a US$26.1 million reduction in gross direct mining costs, reflected in the 10% reduction of cash costs to US$732 per ounce sold. Earnings for the year were US$90 million, or US 22.1 cents per share. These were impacted by significant revaluations of our indirect tax balance held in Tanzanian shillings and out of the money oil hedges partially offset by deferred taxation changes at Buzwagi. Our Approach Our new approach to operating our assets has focused on three key pillars: Our Business, Our People and Our Relationships. We have made significant technical changes to Our Business, to ensure that each of our mines are correctly engineered and set up to deliver free cash flow: At Bulyanhulu, we have changed to a mechanised mining method, with long hole stoping becoming the prime mining method replacing labour intensive conventional hand-held mining. This is both safer and more cost effective than previous hand-held methods. We have also brought in contractors to accelerate development of the Upper East and Lower West Zones in the mine which will improve our mining flexibility and allow us to mine at our reserve grade. During the year we also commissioned the CIL Plant Expansion at the mine which will provide incremental low cost ounces from the reprocessing of tailings. At North Mara, we are moving forward with the creation of an underground operation at one of the mine s open pits, having had the project approved by the Board in Q The Gokona Underground project is expected to produce 450,000 ounces of gold over a 5 year life of mine, with an AISC of less than US$750 per ounce sold. We believe that this will be more profitable than open pit mining and will have a much lower impact on the surrounding communities. At Buzwagi, we shortened the life of the mine so that we are mining only profitable ounces. Our mine plan now produces positive cash flow over each year of its remaining life. 2

3 Our second pillar is Our People, who are our core asset. We have significantly reduced the levels of management, restructured our corporate offices, commenced a new cultural transformation programme (Tufanikiwe Pamoja / Together We Succeed) and introduced a behavioural safety programme (Tunajali / We Care). We are focused on creating a high performance culture where our people are held accountable, but are given the tools to succeed. As part of this process we have already uncovered real talent within the workforce as well as seeing talented people returning to Acacia. The final pillar is Our Relationships, which we have been focused on improving with the communities around our mines and with the Government. We have engaged more actively in the community, the media and our broader stakeholders. We have also worked hard to build our relationships with local and national Government officials to ensure that we receive the appropriate support for our business to continue to be a key economic development driver for our host countries. Expanding our Footprint We continue to look to enhance our portfolio of assets, and during 2014 made our first entry into West Africa by entering into an earn-in agreement over the South Houndé Project in Burkina Faso. We believe that exploration is a significant driver of value for the business over the long term and now is the time to invest, which is a contrarian view to many in the market. The earn-in allows us to earn an interest of up to 75% over a four year period in the highly prospective project which already includes a 1.5Moz Au Inferred resource. We also had a successful year within our existing exploration portfolio, with the drilling programmes at Bulyanhulu leading to the addition of 2.3Moz of gold into resources at very competitive costs. This is approximately half of our three year target to add 5Moz of gold resources at the mine as we look to ensure that production matches the geological endowment at Bulyanhulu. We also made good progress in Kenya with an extensive and successful aircore drilling programme across the land package which is now being followed up with deeper drilling. We will continue to look for further exploration acreage in West Africa as well as other opportunities to drive shareholder value. Safety It is with sadness that I report that we experienced a fatality during the year, with Emmanuel Mrutu, an underground miner at Bulyanhulu, passing away after having been fatally injured in a fall of ground incident at the mine in March. We fully investigated the incident and have implemented a number of recommendations to prevent re-occurrence. Safety is something I am passionate about and having been involved in underground mining for over 20 years, I am well aware of the risks. One of the key projects we started during the year was Tunajali or We Care, a behavioural safety programme designed to embed the culture of safety, rather than just relying on checks and processes. This programme has now been rolled out across all of our operations and we are beginning to see the benefits in our on-going safety statistics. We continue to target zero injuries and having every person going home safely every day. Indirect Taxes Further progress has been made with respect to the build-up of VAT, and the Company received net refunds of US$2.6 million during the fourth quarter, bringing total net refunds for 2014 to approximately US$41 million. Total gross refunds received in 2014 amounted to US$132.8 million. We have also continued discussions with the Tanzanian Government on the establishment of an appropriate mechanism to safeguard the recoverability of VAT payments over the long term. These are centred around the establishment of an escrow account for VAT paid on domestic goods, similar to that currently used to provide for the refunding of VAT paid on imports and our discussions are on-going. As at 31 December 2014, the outstanding amount relating to the total indirect tax receivable, not covered by the 2011 Memorandum of Settlement, stood at US$46 million, roughly US$49 million lower than 31 December Barrick Gold shareholding In March 2014, our majority shareholder Barrick Gold sold 10% of Acacia s outstanding share capital to institutional shareholders. The placing was priced at 275 pence and reduced Barrick s shareholding to 63.9%. This was a positive step by Barrick and increased our free float by around 40% which led to a subsequent increase in trading liquidity. Final dividend The Board of Directors is pleased to announce the approval of a final dividend for 2014 of US2.8 cents per share, an increase of 40% when compared to Subject to shareholders approving this recommendation at the AGM on 23 April 2015, the final dividend will be paid on 29 May 2015 to shareholders on the register as of 8 May The ex-dividend date is 7 May Together with our interim dividend of US1.4 cents per share, this represents a payout level of 19% of cash flow as defined by our dividend policy. Outlook The focus for 2015 is to continue to deliver free cash flow from our high quality portfolio of mines as we work to enable them to deliver to their full geological potential. We have implemented changes across our business in order to continue to drive cost reductions and production growth. We are focused on continued delivery operationally in order to drive free cash flow, of which 15-30% is expected to be returned to shareholders via dividends, with the remainder appropriately allocated across further capital returns, organic growth or acquisition opportunities. 3

4 We successfully overcame challenges to the business in 2014 and expect that 2015 will present similar challenges as we seek to successfully deliver on the turnaround at Bulyanhulu, move into commercial ore production from the Gokona Underground at North Mara and ensure that we maintain our strengthened relationships with all stakeholders and the Government. For 2015 we expect to see increased production of between 750,000 to 800,000 ounces of gold. Production at each of the mines is expected to remain in line with Q during the first quarter, with the bulk of the increase in production expected to be realised in the second half of the year. At the mine level, we expect a significant ramp up at Bulyanhulu as we move through the year driven by an improvement in head grade, incremental production from the Upper East Zone and an increased contribution from the expanded CIL circuit. At Buzwagi, production is expected to be broadly in line with 2014 as we continue to operate around the reserve grade of the asset. At North Mara, head grade is expected to decline marginally as the Gokona pit transitions from an open pit to underground operation, leading to an increased proportion of ore being sourced from the lower grade Nyabirama pit during the year. This will be partially offset by the higher grade ore from underground. As a result we expect to see a corresponding reduction in production at the mine. We are targeting further reductions to our unit costs in 2015, predominantly driven by the incremental production at Bulyanhulu, and estimate the cash cost per ounce for the year, including royalties, will be between US$ per ounce sold, a reduction of up to 5% on For 2015 we expect overall capital expenditure of between U$220 million US$240 million, a further reduction on 2014 as we enforce stringent capital controls and move closer to industry average per ounce spend. We expect sustaining capital of US$90 million US$100 million as we scale up operations at Bulyanhulu and set up the long term future at North Mara; with capitalised development, inclusive of deferred stripping of US$125 million US$135 million. This is driven by increased development activity at Bulyanhulu which commenced in 2014 focused on opening additional mining areas, and at North Mara as work accelerates on the Gokona Underground project. The increase in spend is partially offset by a reduction in capital requirements at Buzwagi as it moves towards the end of mining activity. Expansionary capital of US$5 million relates to additional underground drilling at Bulyanhulu aimed at increasing the scale of the ore body as well as expansionary drilling at North Mara, predominantly under the Nyabirama pit. As a result of the above, coupled with flat corporate administration costs, we estimate all-in sustaining cost per ounce sold for the year will be between US$1,050 US$1,100, a reduction of up to 5% on The evolution of these costs during the year will be driven by our production profile and as a result we expect to see lower costs in the second half than the first. Finally, I would like to thank all of my colleagues for their commitment, enthusiasm and hard work throughout what has been a transformative year for Acacia. I am delighted by our progress to date, and am driven by the opportunity to make this company a leader in Africa. I would also like to thank our Board for their support and guidance through the year and I am very much looking forward to 2015 and beyond. Brad Gordon Chief Executive Officer 4

5 Key statistics restated to reflect Tulawaka as a discontinued operation Three months ended 31 December Year ended 31 December (Unaudited) Tonnes mined (thousands of tonnes) 10,776 11,570 41,684 54,076 Ore tonnes mined (thousands of tonnes) 2,281 2,151 8,170 7,225 Ore tonnes processed (thousands of tonnes) 2,405 1,817 8,413 7,914 Process recovery rate (percent)* 85.5% 88.5% 88.0% 88.4% Head grade (grams per tonne)* Gold production (ounces) 181, , , ,002 Gold sold (ounces) 194, , , ,597 Copper production (thousands of pounds) 3,107 3,548 14,068 11,970 Copper sold (thousands of pounds) 3,815 3,010 13,448 11,570 Cash cost per tonne milled (US$/t) 1, Per ounce data Average spot gold price 2 1,201 1,276 1,266 1,411 Average realised gold price 1 1,194 1,251 1,258 1,379 Total cash cost All-in sustaining cost 1 1,088 1,163 1,105 1,346 Average realised copper price (US$/lb) Financial results restated to reflect Tulawaka as a discontinued operation Three months ended 31 December Year ended 31 December (Unaudited, in US$'000 unless otherwise stated) Revenue 243, , , ,004 Cost of sales (191,732) (169,770) (688,278) (713,806) Gross profit 52,129 51, , ,198 Corporate administration (10,274) (8,273) (32,685) (33,970) Share based payments (2,416) (625) (8,388) 1,813 Exploration and evaluation costs (4,331) (5,979) (18,284) (16,927) Corporate social responsibility expenses (3,412) (3,667) (10,787) (12,237) Impairment charges - (133,320) - (1,044,310) Other charges (21,509) (8,995) (47,921) (30,424) Profit/(loss) before net finance expense and taxation 10,187 (109,026) 123,905 (920,857) Finance income ,324 1,670 Finance expense (3,182) (2,462) (10,043) (9,552) Profit/(loss) before taxation 7,390 (110,890) 115,186 (928,739) Tax credit/(expense) 13,906 19,232 (25,977) 187,959 Net profit/(loss) from continuing operations 21,296 (91,658) 89,209 (740,780) Discontinued operations: Net (loss)/gain from discontinued operations (160) (8,684) 726 (57,653) Net profit/(loss) for the year 21,136 (100,342) 89,935 (798,433) Attributed to: Owners of the parent (net earnings/(loss)) 21,136 (97,700) 90,402 (781,101) - Continuing operations 21,296 (91,658) 89,209 (740,780) - Discontinued operations (160) (6,042) 1,193 (40,321) Non-controlling interests - (2,642) (467) (17,332) - Discontinued operations - (2,642) (467) (17,332) 1 These are non-ifrs financial performance measures with no standard meaning under IFRS. Refer to Non IFRS measures on page 25 for definitions. 2 Reflect the London PM fix price. 3 Restated for the reclassification of Tulawaka as a discontinued operation. 4 Cash cost per tonne milled excluding the reprocessing of tailings at Bulyanhulu amounted to US$69 per tonne for the quarter and US$65 for the year ended 31 December *Reported process recovery rates and head grade include tailings retreatment at Bulyanhulu. Excluding the impact of the tailings retreatment Q4 and FY14 process recovery would be 87.4% and 88.9% respectively, with Q4 and FY14 head grade being 3.1g/t and 3.2g/t respectively 5

6 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) Daniel Thöle About Acacia Mining plc Acacia Mining plc (), formerly African Barrick Gold, is Tanzania s largest gold miner and one of the largest producers of gold in Africa. We have three producing mines, all located in Northwest Tanzania: Bulyanhulu, Buzwagi, and North Mara and a portfolio of exploration projects in Tanzania, Kenya and Burkina Faso. Our approach is focused on strengthening our three core pillars; our business, our people and our relationships. Our name change from African Barrick Gold to Acacia Mining reflects a new approach to mining, and an ambition to create a leading African Company. Acacia Mining 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 remains our majority shareholder. Acacia Mining reports in US dollars and in accordance with IFRS as adopted by the European Union, unless otherwise stated in this announcement. Conference call A presentation will be held for analysts and investors on 16 February 2015 at Noon London time. For those unable to attend, an audio webcast of the presentation will be available on our website. For those who wish to ask questions, the access details for the conference call are as follows: Participant dial in: +44 (0) / Password: Acacia 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. 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 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. 6

7 LSE: ACA TABLE OF CONTENTS 2014 Operating Review 8 Exploration Review 12 Financial Review 15 Going Concern Statement 24 Non-IFRS measures 25 Risk Review 27 Condensed Financial Information: - Consolidated Income Statement and Consolidated Statement of Comprehensive Income 29/30 - Consolidated Balance Sheet 31 - Consolidated Statement of Changes in Equity 32 - Consolidated Statement of Cash Flows 33 - Notes to the Condensed Financial Information 34 7

8 2014 Operating Review We made good progress across our assets in 2014 delivering production for the year of 718,651 ounces, an increase of 13% year on year, together with a 10% decrease in cash costs and an 18% decrease in AISC. Increased production drove a 9% increase in sales volumes to 703,680 ounces. Operationally, North Mara s production of 273,803 ounces was 7% higher than the prior year due to improved throughput rates. AISC fell by 23% to US$947 per ounce sold predominantly due to lower capitalised development and sustaining capital expenditure together with the impact of increased sales volumes. During Q4 2014, our Board approved the Gokona Underground project which is expected to produce 450,000 ounces of gold over a 5 year life of mine, with an AISC of below US$750 per ounce sold. This project is now moving into the execution phase and is expected to deliver first stoping ore in the first half of Bulyanhulu saw an 18% increase in production to 234,786 ounces due to an improved run of mine grade (8.7g/t) as a result of access to higher grade stopes, coupled with higher throughput from the processing of reclaimed tailings which delivered 12,405 ounces of production. This was partially offset by lower recoveries as a result of underperformance of the elution circuit which led to increased tailings losses. AISC was down by 6% to US$1,266 per ounce sold as cost savings were partially offset by an investment in underground development to drive the grade improvement. At Buzwagi, gold production for the year of 210,063 ounces was 15% higher than 2013, due to improved head grade as a result of mining in the main ore zone and increased recoveries due to business improvement projects. This was partially offset by a 7% decrease in throughput due to plant downtime for planned and unplanned maintenance. Changes to the mine plan in 2013 reduced waste tonnes mined, delivering a 24% reduction in total tonnes mined against the prior year. The combination of these factors resulted in a reduction in AISC of 30% to US$1,055 per ounce sold. Total tonnes mined during the year amounted to 41.7 million tonnes, a decrease of 23% on 2013 as a result of the changes to mine plans at both North Mara and Buzwagi. Ore tonnes mined were 8.2 million tonnes compared to 7.2 million in 2013, also as a result of the changes to the mine plans in Ore tonnes processed amounted to 8.4 million tonnes, an increase of 6% on 2013 primarily driven by increased throughput at Bulyanhulu and North Mara partially offset by reduced throughput at Buzwagi. Head grade for the year of 3.0 g/t was 7% higher than in 2013 (2.8 g/t). This was due to a 13% increase in head grade at Buzwagi and a 12% increase in run of mine grade at Bulyanhulu, partially offset by the reprocessing of lower grade tailings at Bulyanhulu. Our cash costs for the year were 10% lower than in 2013, and amounted to US$732 per ounce sold. The decrease was primarily due to: The impact of the increased production base (US$112/oz); Reduction in the workforce (mainly a 28% decrease in the international workforce compared to the same period in 2013) (US$29/oz); and Lower G&A costs driven by lower warehouse related costs and lower management fee charges given the overall lower corporate cost structure (US$22/oz). Partly offset by: Lower capitalised development costs at Buzwagi and North Mara as a result of the revised mine plans driving a lower strip ratio (US$72/oz); and Higher maintenance costs at Bulyanhulu and Buzwagi due to increased maintenance activity as a result of maintenance scheduling and the impact of maintenance cycles (US$19/oz). The all-in sustaining cost of US$1,105 per ounce sold for the year was 18% lower than 2013, predominantly due to lower cash costs as described above and the impact of higher sales volumes on per unit costs, combined with an increased production base mainly driven by the improved head grade, lower sustaining capital expenditure at all sites and lower capitalised development costs at North Mara and Buzwagi due to the revised mine plans. As a result of operational and working capital improvements, cash generated from operating activities in 2014 increased by 55% over the prior year period to US$289.5 million despite the reduction in the average realised sales price. Capital expenditure for the year ended 31 December 2014 amounted to US$253.8 million compared to US$385.1 million in Capital expenditure primarily comprised capitalised development expenditure (US$132.4 million), including US$21.2 million related to development costs for the Bulyanhulu Upper East and Lower West projects, investment in the Bulyanhulu CIL Expansion project (US$44.5 million), component and equipment costs (US$21.8 million) and investments in tailings and infrastructure (US$32.4 million). As previously announced, as of 1 January 2015 we have changed our definition of gold produced. Going forward, we will record only gold poured as production ounces and will not include changes to our gold-in-circuit ( GIC ) ounces. Whilst we expect GIC to remain relatively stable going forward, we will now eliminate any potential volatility from movement in GIC levels and would expect our production ounces to more closely match our sales ounces. This new definition is included in our expected production levels for

9 Mine Site Review Bulyanhulu Key statistics Three months ended 31 December Year ended 31 December (Unaudited) Key operational information: Ounces produced oz 66,033 53, , ,286 Ounces sold oz 63,166 56, , ,304 Cash cost per ounce sold 1 US$/oz AISC per ounce sold 1 US$/oz 1,225 1,118 1,266 1,344 Copper production Klbs 1,370 1,348 5,289 4,855 Copper sold Klbs 1,425 1,304 4,925 4,508 Underground ore tonnes hoisted Kt Run-of-mine processing: Ore milled Kt Head grade g/t Mill recovery % 83.8% 91.2% 88.0% 90.9% Ounces produced oz 58,998 53, , ,286 Cash cost per tonne milled 1 US$/t Reprocessed tailings: Ore milled Kt Head grade g/t Mill recovery % 59.4% % - Ounces produced oz 7,035-12,405 - Capital Expenditure - Sustaining capital US$('000) 9,936 4,333 23,388 25,193 - Capitalised development US$('000) 14,210 10,750 60,151 45,428 - Expansionary capital US$('000) 6,272 41,581 48, ,912 30,418 56, , ,533 - Non-cash reclamation asset adjustments US$('000) (181) (5) 6,141 (10,044) Total capital expenditure US$('000) 30,237 56, , ,489 1 These are non-ifrs financial performance measures with no standard meaning under IFRS. Refer to Non IFRS measures on page 24 for definitions. Operating performance Full year gold production of 234,786 ounces was 18% higher than the prior year due to improved run of mine grade. This was driven by increased access to higher grade stopes coupled with higher throughput as a result of the processing of tailings. This was partially offset by lower recoveries as a result of underperformance of the elution circuit which led to increased tailings losses. Gold ounces sold of 215,740 ounces were 10% higher than 2013 primarily due to the higher production base, but were lower than production for the year due to strong production late in Q4 impacting on the timing of sales and a build-up in gold in circuit as the new CIL circuit was commissioned. Copper production of 5.3 million pounds for the year was 9% higher than in 2013 due to higher copper grades combined with higher run of mine throughput. Cash costs for the year of US$812 per ounce sold were 9% lower than the prior year of US$890, driven by the higher production base, combined with savings in labour costs mainly due to a reduction in the international workforce, lower general administration costs primarily resulting from lower management fees and increased capitalised development costs driven by development acceleration projects. This was partially offset by higher contractor costs incurred for ore development and higher energy costs mainly as a result of the increased processing activity with the new CIL circuit now fully commissioned. AISC per ounce sold for the year of US$1,266 was 6% lower than in 2013 (US$1,344), as lower cash costs and sustaining capital expenditure were partially offset by the investment in capitalised development. The new CIL circuit was commissioned during the second half of 2014 with the first gold pour taking place in August Production for the year from reprocessed tailings amounted to 12,405 ounces, lower than planned as a result of delays in construction completion, issues experienced in the elution circuit performance and the detoxification of the tailings. The project to accelerate the retreatment of the historic higher grade tailings in preference to the rougher tailings was completed and commissioning trials have commenced. In 2014 a key focus was on the accelerated development of the Upper East and Lower West zones to provide increased mining flexibility and to ensure the mine is able to deliver to its geological potential. In order to achieve this, a specialist development 9

10 contractor was engaged in April. During the year total development costs incurred for the two initiatives (expensed and capitalised) were US$21.2 million, and this is included in the Bulyanhulu and Group AISC figures. During the fourth quarter initial development ore from both zones was delivered to the mill. Capital expenditure for the year before reclamation adjustments amounted to US$131.5 million, 29% lower than the 2013 expenditure of US$185.5 million, mainly driven by lower expansionary capital spend as the new CIL circuit was completed in Capital expenditure for 2014 consisted mainly of capitalised underground development costs (US$60.2 million including US$21.2 million related to development costs for the Bulyanhulu Upper East Lower West projects) and expansionary capital investment relating to the new CIL circuit (US$44.5 million). Buzwagi Key statistics Three months ended 31 December Year ended 31 December (Unaudited) Key operational information: Ounces produced oz 44,398 51, , ,984 Ounces sold oz 55,316 50, , ,348 Cash cost per ounce sold 1 US$/oz AISC per ounce sold 1 US$/oz 990 1,300 1,055 1,506 Copper production Klbs 1,738 2,200 8,780 7,115 Copper sold Klbs 2,390 1,706 8,523 7,062 Mining information: Tonnes mined Kt 6,878 7,244 24,510 32,177 Ore tonnes mined Kt 1,248 1,250 4,692 3,753 Processing information: Ore milled Kt 1, ,086 4,400 Head grade g/t Mill recovery % 94.2% 88.8% 92.4% 88.2% Cash cost per tonne milled 1 US$/t Capital Expenditure - Sustaining capital US$('000) 4,225 4,309 12,817 31,589 - Capitalised development US$('000) 2,759 10,812 31,357 60,136 6,984 15,121 44,174 91,725 - Non-cash reclamation asset adjustments US$('000) (1,318) (2,318) (1,131) (9,230) Total capital expenditure US$('000) 5,666 12,803 43,043 82,495 1 These are non-ifrs financial performance measures with no standard meaning under IFRS. Refer to Non IFRS measures on page 24 for definitions. Operating performance Gold production for the year of 210,063 ounces was 15% higher than 2013, driven by improved head grade as a result of mining in the main ore zone and increased recoveries due to business improvement projects. This was partially offset by a 7% decrease in throughput due to plant downtime for both planned and unplanned maintenance. Gold sold for the year amounted to 213,399 ounces, 14% above that of 2013 due to the higher production and 2% above production due to the sale of ounces on hand at the start of the year. Recoveries increased by 5% over 2013 as a result of business improvement initiatives in the second half of the year providing improved blending and management of the CIL plant s performance, coupled with the increased head grade. Total tonnes mined for the year of 24.5 million tonnes were 24% lower than in 2013 due to changes in the mine plan compared to 2013, as already reported. Copper production of 8.8 million pounds for the year was 23% higher than in 2013 driven by the higher concentrate production and higher copper grades. Cash costs for the year of US$791 per ounce sold were 16% lower than in 2013 (US$945). Cash costs were positively impacted by a higher production base and savings driven by lower contracted services costs due to lower rates, lower energy costs which in turn were affected by lower self-generation as a result of improved TANESCO reliability, lower labour costs as a result of the reduction in the international workforce and lower corporate costs incurred and allocated to site. This was partially offset by lower capitalised development costs as a result of the change in the mine plans and increased maintenance costs driven by equipment breakdowns and plant maintenance. AISC per ounce sold for the year of US$1,055 was 30% lower than in 2013 (US$1,506). This was driven by the lower cash cost base and lower capitalised development and sustaining capital expenditure. 10

11 Capital expenditure for the year before reclamation adjustments, of US$44.2 million was 52% lower than in 2013 (US$91.7 million). The significant change to the mine plan communicated in 2013 reduced required investment in waste movement and sustaining capital. Key capital expenditure for the year included capitalised stripping costs (US$31.4 million), investment in tailings and infrastructure (US$7.0 million) and component change out costs (US$5.4 million). North Mara Key statistics Three months ended 31 December Year ended 31 December (Unaudited) Key operational information: Ounces produced oz 70,655 60, , ,732 Ounces sold oz 75,760 61, , ,945 Cash cost per ounce sold 1 US$/oz AISC per ounce sold 1 US$/oz 912 1, ,227 Mining information: Tonnes mined Kt 3,653 4,104 16,265 21,027 Ore tonnes mined Kt ,569 2,601 Processing information: Ore milled Kt ,804 2,643 Head grade g/t Mill recovery % 86.9% 86.0% 87.2% 86.8% Cash cost per tonne milled 1 US$/t Capital Expenditure - Sustaining capital US$('000) 4,967 3,562 18,049 38,386 - Capitalised development US$('000) 4,674 13,651 40,900 65,594 - Expansionary capital US$('000) 5, , ,245 17,658 72, ,929 - Non-cash reclamation asset adjustments US$('000) 12,219 (4,506) 16,003 (11,271) Total capital expenditure US$('000) 27,464 13,152 88,078 93,658 1 These are non-ifrs financial performance measures with no standard meaning under IFRS. Refer to Non IFRS measures on page 24 for definitions. Operating performance Production for the year of 273,803 ounces was 7% higher than the prior year primarily as a result of higher throughput rates, which exceeded the prior year period by 6%. The higher milled tonnes were due to business improvement initiatives in both the mining and milling areas. Gold ounces sold for the year of 274,540 ounces were in line with production, and 5% higher than the prior year due to the higher production base. Cash costs for the year of US$623 per ounce sold were 5% lower than in 2013 (US$659). Cash costs were positively impacted by the higher production base, lower labour costs as a result of the reduction in the international workforce and lower management fees, partially offset by lower capitalised mining costs due to changes in the mine plan compared to AISC per ounce sold for the year of US$947 was 23% lower than in 2013 (US$1,227) predominantly due to lower cash costs, capitalised development and sustaining capital expenditure in combination with the impact of increased sales volumes. During Q4 2014, the Acacia Board approved the Gokona Underground project which is expected to produce 450,000 ounces of gold over a 5 year life of mine, with an AISC of below US$750 per ounce sold. This project is now moving into the execution phase with the underground exploration portal, which will help to develop a better understanding of the ore body. As at 31 December 2014 the portal was 301 metres advanced and it is expected to encounter development ore in the first quarter of Following the Board approval future capital expenditure will be classified as either sustaining capital or capitalised development and is expected to amount to US$30 million in The total expansionary capital spend on the project in 2014 amounted to US$13.1 million. Capital expenditure for the year before reclamation adjustments of US$72.1 million was 31% lower than in 2013 (US$104.9 million), due to lower capitalised development and lower sustaining capital expenditure, partially offset by higher expansionary expenditure. Key capital expenditure included capitalised stripping costs (US$40.9 million), investments in component costs (US$10.2 million) and tailings and infrastructure ($7.1 million). 11

12 Exploration Review Introduction Overall, 2014 was a successful year of execution and delivery across our greenfield and brownfield exploration projects. During the year, US$18.3 million of exploration activities were expensed, with a further amount of US$2.2 million relating to exploration and evaluation activities being capitalised. Key highlights included our entry into highly prospective acreage in Burkina Faso, successful drilling at our greenfield joint venture projects in Kenya, and further successful drilling results from our brownfield exploration projects at Bulyanhulu from both surface and underground drilling. Brownfield Exploration In 2014, near-mine brownfield exploration successfully identified extensions to known resources. The brownfield exploration programme was entirely focused on the Bulyanhulu ore body where surface and underground diamond core drilling returned excellent results from step-out resource drilling on both Reef 1 and Reef 2 mineralised systems. This work has led to the inclusion of a total of 2.3Moz to Indicated and Inferred resources and has extended the resource envelope by 1.5 kilometres to the West. Bulyanhulu During 2014, Bulyanhulu undertook two diamond core exploration programmes, one from surface targeting Western extensions of both the Reef 1 and Reef 2 veins series, and the second from underground, targeting depth extensions of Reef 2 in the East of the mine. Lower West Programme Surface The programme was designed to test the extensions of the Reef 1 structure from 400 metres to 1,200 metres west of the current Bulyanhulu resource where historic drilling had shown indications of further gold mineralisation. Additionally, holes were also drilled to intersect the Reef 2 vein series, and provide support that the Reef 2 system is mineralised up to 2 kilometres west of the currently delineated underground resources. A total of 9,721 metres of diamond core was drilled from surface holes during 2014, bringing the total for the programme to 14,373 metres in a total of 16 holes. Results from the drilling successfully showed the continuation of high-grade gold mineralisation in the narrow reef-style structures in the western areas of both the Reef 1 and Reef 2 series. Better results from the programme, which have all previously been reported, included significant intersections of: Reef 1 BGMDD0054W1: 18.7g/t Au from 1,435m - Reef 1 BGMDD0054W2: 23.8g/t Au from 1,640m - Reef 1 BGMDD0055W3: 7.00g/t Au from 1,059m Reef 1 BGMDD0056W2: 16.5g/t Au from 1,550m - Reef 1 Reef 2 Series BGMDD0054: Au from 1,174m - Reef 2 series BGMDD0054: 37.9g/t Au from 1,335m - Reef 2 series BGMDD0054W2: 24.2g/t Au from 1,034m - Reef 2 series BGMDD0054W6: 31.1g/t Au from 681m - Reef 2 series BGMDD0056W1: 94.6g/t Au from 805m - Reef 2 series BGMDD0056W2: 26.6g/t Au from 906m - Reef 2 series The results from 2013/2014 surface drilling programme have been very positive and demonstrated that gold mineralisation, particularly on the Reef 2 vein system, continues west of the mine, which opens the potential for a significant resource expansion on the Reef 2 series at relatively shallow levels (<1,000-1,600m) compared to the Reef 1 system. East Deeps Underground Drilling The programme targeted extensions of the East Zone high-grade ore shoot on the Bulyanhulu Reef 2 system outside of the current resource model. The programme was drilled from several underground drill platforms with a total of 3,058 metres of diamond core completed from three holes during 2014, bringing the total for the programme to 5 holes for 5,598 metres. The results received during 2014 were all from the Reef 2 series, and included better intersections of: UX : 19.0g/t Au from 621m UX : 76.7g/t Au from 1203m UX : 13.6g/t Au from 1,042m UX : 18.4g/t Au from 1167m 12

13 These Reef 2 drill intersections prove the continuity, at depth, of the high-grade East Zone mineralisation, and show that the high-grade shoot remains open at depth. Results from both of the drilling programmes were included in the year end resource and reserve calculations and increased Indicated Resources by 760koz and Inferred Resources by 1.6Moz for a total addition of 2.3Moz. Furthermore, the surface programme extended the extent of mineralisation by 1.5km to the west of the previous resource shell. Future drilling programmes to both infill the area between the western extension areas and the current Reef 1 and Reef 2 resource areas and to infill East Deeps area will be completed from underground, by the Bulyanhulu Mine Geology Group, over the next 3-5 years targeting a further addition of 3Moz of resources. Greenfield Exploration Throughout 2014, we have continued our focus on identifying new greenfields exploration opportunities to complement our existing exploration portfolio. We have significantly progressed our understanding of the West Kenya joint venture properties and have seen very encouraging results from reconnaissance and diamond core drilling. Additionally, we entered into a joint venture with Sarama Resources Limited, over a large and highly prospective land package in the Houndé Belt of Burkina Faso. We continue to look throughout Africa for opportunities to further enhance and diversify our exploration portfolio through low cost joint ventures or option agreements. Kenya West Kenya Joint Venture Projects An extensive exploration programme was completed in 2014 across the entire area of Acacia s West Kenya projects including aircore drilling of 1,171 holes for 42,232 metres, 10,759 soil samples, 1,060km 2 of mapping and 190 line kilometres of IP surveys significantly advancing our understanding of the Busia-Kakamega greenstone belt and developing in excess of 40 new targets for follow-up work. Kakamega Dome Camp Aircore drilling tested several gold-in-soil anomalies along the Liranda Corridor on the south side of the Kakamega Dome. The aircore programme was completed in H and was very successful with 247 holes of the 992 holes completed since the programme commenced in 2013, returning anomalous results (>0.1g/t Au) of which 87 holes intersected zones of >0.50g/t Au. Better results from the 2014 activity included: KDAC0312: 15.2 g/t Au from 41m and 1.71 g/t Au from 62m KDAC0617: 7.7 g/t Au, including 13.7 g/t Au KDAC0832: 2.77 g/t Au KDAC0841: 1.94 g/t Au and 4.35 g/t Au KDAC0858: 22.3 g/t Au, including 44 g/t Au KDAC0877: 12.6g/t Au, including 46.3 g/t Au KDAC 0998: 3.20 g/t Au from 105m The gold mineralisation has been intersected in a variety of rock types along the Liranda Corridor, which indicates opportunities to test for different types and styles of gold deposits in this area. The majority of gold mineralisation intersected to date has been within weathered (oxidised) bedrock, often associated with quartz veining. The aircore results are very encouraging given the current line spacing of the aircore traverses varies between 200 metres and 400 metres and the average depth of drilling to date is a relatively shallow at approximately 50 metres. In late 2014 we commenced a diamond core drill programme to investigate the orientation and continuity of gold mineralisation intersected in the aircore drilling to date. By year end a total of 20 holes had been completed for 3,709 metres of diamond core. Delays in the transport and processing of drill core samples over the end-of-year period resulted in a limited number of results being received and processed through QA/QC procedures by the period end. Initial interpretation of diamond core drill results and structural data indicates that in a number of areas drilling has not intersected the mineralised interval and subsequently follow-up drill holes have been re-oriented to assess the geology and mineralised structures at the appropriate drill angle. A number of scissor holes have now been drilled to complete this task. Lake Zone Camp In tandem with the aircore drilling, we are undertaking gradient and pole-dipole IP and Resistivity across selected gold-in-soil anomalies throughout the Lake Zone Camp in the central and western areas of the project. A total of 190 line kilometres of surveys were completed in Ten targets showing distinct resistivity and/or chargeability zones coincident with the gold-insoil anomalies have been delineated and should be considered as priority targets for future drilling programmes. The Abimbo target in the far west of the West Kenya project area is expected to be the first target tested in 2015; this target is a Gold- Copper-Molybdenum-Arsenic soil geochemical anomaly that extends over 6km 2 and is co-incident with a large IP anomaly. 13