Acacia Mining plc 2017 Interim Results Presentation July 2017 - PowerPoint PPT Presentation

LSE:ACA Acacia Mining plc 2017 Interim Results Presentation July 2017

Important Notice This presentation includes “forward - looking statements” that express or imply such statements will prove to be correct. Accordingly, investors should not place expectations of future events or results as opposed to historical facts. These reliance on forward-looking statements contained in this presentation. Any statements include, financial projections and estimates and their underlying forward-looking statements in this presentation only reflect information assumptions, statements regarding plans, objectives and expectations with available at the time of preparation. Save as required under the Market Abuse respect to future production, operations, costs, projects, and statements Regulation or otherwise as may be required under applicable law, Acacia regarding future performance. Forward-looking statements are generally explicitly disclaims any obligation or undertaking publicly to update or revise any identified by the words “plans,” “expects,” “anticipates,” “believes,” “intends,” forward-looking statements in this presentation, whether as a result of new “estimates” and other similar expressions. information, future events or otherwise. Nothing in this presentation should be construed as a profit forecast or estimate and no statement made should be All forward-looking statements involve a number of risks, uncertainties and interpreted to mean that Acacia’s profits or earnings per share for any future other factors, many of which are beyond the control of Acacia, which could cause period will necessarily match or exceed its historical published profits or actual results and developments to differ materially from those expressed in, or earnings per share. implied by, the forward-looking statements contained herein. Factors that could cause or contribute to differences between the actual results, performance and Any mineral reserves and mineral resources estimates contained in this achievements of Acacia include, but are not limited to, changes or developments presentation have been calculated as at 31 December 2016 in accordance with in political, economic or business conditions or national or local legislation or National Instrument 43-101 as required by Canadian securities regulatory regulation in countries in which Acacia conducts - or may in the future conduct - authorities. Canadian Institute of Mining, Metallurgy and Petroleum (CIM) business, industry trends, competition, fluctuations in the spot and forward price definitions were followed for mineral reserves and resources estimates. Any of gold or certain other commodity prices (such as copper and diesel), currency reserves and resources figures stated in this presentation are estimates only. All fluctuations (including the US dollar, South African rand, Kenyan shilling and estimates stated are subject to a variety of unknown factors, risks and Tanzanian shilling exchange rates), Acacia’s ability to successfully integrate considerations, such that no assurances whatsoever can be given that any acquisitions, Acacia’s ability to recover its reserves or develop new reserves, indicated quantities of metal will be produced. In addition, estimated figures and including its ability to convert its resources into reserves and its mineral totals stated may not add up due to rounding. potential into resources or reserves, and to process its mineral reserves This presentation is provided for general information purposes only. It does not successfully and in a timely manner, Acacia’s ability to complete land constitute an invitation or offer to underwrite, subscribe for or otherwise acquire acquisitions required to support its mining activities, operational or technical or dispose of any securities of Acacia in any jurisdiction. You are reminded that difficulties which may occur in the context of mining activities, delays and you have received this presentation on the basis that you are a person to whom technical challenges associated with the completion of projects, risk of trespass, this presentation may be lawfully made and delivered. You may not and are not theft and vandalism, changes in Acacia’s business strategy and on -going authorised to: (i) reproduce or publish this presentation; or (ii) distribute, implementation of operational reviews, as well as risks and hazards associated disclose or pass on this presentation to any other person, in whole or in part, by with the business of mineral exploration, development, mining and production any medium or in any form, in breach of any applicable securities laws. BY and risks and factors affecting the gold mining industry in general. ACCEPTING THIS PRESENTATION, YOU ACKNOWLEDGE AND AGREE TO Although Acacia’s management believes that the expectations reflected in such THE CONTENTS OF THIS DISCLAIMER AND YOU AGREE TO BE BOUND BY forward-looking statements are reasonable, Acacia cannot give assurances that THE FOREGOING LIMITATIONS. 2017 Interim Results Presentation 2 July 2017

H1 Review Operational delivery continuing despite difficult backdrop  Very strong operational performance has been overshadowed by the concentrate ban enforced in early March  H1 gold production of 428koz, 4% higher than H1 2016  Q2 gold production of 209koz  H1 AISC of US$893 per ounce sold, 5% below H1 2016  If sales matched production, H1 AISC would have been US$800/oz  Q2 AISC of US$835 per ounce sold was 10% below Q2 2016  US$175m of revenue not realised in H1 as a result of the concentrate ban  Cash balance fell to US$176m at period end, from US$318m  Due to buildup in unsold concentrate, together with US$51m VAT outflow  As a result of negative cashflow, no interim dividend declared 2017 Interim Results Presentation 3 July 2017

Update on Tanzania

Metallic Mineral Concentrate Ban Concentrate accounted for 36% of group production in H1 2017  In March 2017, the Tanzanian Ministry of Energy and Minerals announced a ban on the export of metallic mineral concentrates  Concentrate accounted for ~45 % of Bulyanhulu’s and ~64% of Buzwagi’s H1 production  127koz of gold, 8.3mlbs of copper and 107koz of silver built- up in unsold concentrate in Tanzania  North Mara is not impacted as it only produces doré  During Q2, two Presidential Committees announced findings post investigations into mineral content and historic exports of gold/copper concentrates  Acacia fully refutes the implausible findings of both committees  On 15 th June, Barrick and the Tanzanian Government Image of concentrate container agreed to enter into discussions to reach a mutually acceptable solution for all stakeholders  Discussions to start soon, no agreements have yet been made 2017 Interim Results Presentation 5 July 2017

Tanzanian Legislative Changes Sector-wide legislation to promote local ownership  Following publication of Second Presidential Committee’s report, three new bills were presented to the Tanzanian Parliament in late June  These purport to make a number of changes to the operating environment for Tanzania’s extractive industries with respect to Government ownership, royalties, VAT application, local beneficiation and removal of international legal recourse, amongst others  In July, all legislation came into force and some terms of the Acts are being applied  Expect supplementary regulations to set out the proposed practical implementation  We are monitoring the impact of the new legislation in light of our Mineral Development Agreements with the Government  To enable sale of doré to continue, we are paying increased royalty rate of 6%, and separate recently imposed 1% clearing fee on exports, under protest, without prejudice to our legal rights under the MDAs  In July, Acacia subsidiaries served arbitration notices for Bulyanhulu and Buzwagi  A necessary step to protect the Company in light of the ongoing dispute  Our preferred outcome remains a negotiated settlement with the Government  We expect discussions to be wide ranging and incorporate other issues, such as local ownership legislation 2017 Interim Results Presentation 6 July 2017

Major Contributor to Tanzania Tanzania continues to receive significant benefits from our mines  In H1 2017 we paid US$53 million in taxes and royalties in Tanzania  Includes corporate taxes of US$17.3 million  Royalties of US$18.6 million  Without export ban, would have paid a further US$7 million in royalties  Payroll and other taxes of ~US$17.1 million  Paid US$1.6 million in local service levies in H1  US$1.3 million more than required under our MDAs  Second payment of US$1.2 million due in July  30% lower than if there were no export ban  Implemented 6 large-scale social infrastructure projects during H1, with a further 10 underway  Projects positively impacting ~40,000 Tanzanians 2017 Interim Results Presentation 7 July 2017

Operations Review