14 May 2013 African Barrick Gold plc (the "Company" or "ABG") Update on the Operational Review * Continued good progress on the Operational Review * Delivering tangible reductions in the cost base During Q1, ABG launched an Operational Review (the "Review") to ensure the business is able to deliver robust returns and cash flow over the long term and in the current gold price environment. As previously announced, this Review is aimed at realising clear benefits in our cost structure and operating metrics, based on five key areas: - Operating Costs - Capital Costs - Organisational Structure - Corporate Overheads - Mine Planning. The Review has been broken into three concurrent workstreams with an immediate focus (Workstream 1) on the Corporate Overheads, Exploration, Capital spend and the overall Organisational Structure. We have already implemented a series of measures which will substantially reduce the year on year expenditure in these areas, including: - A $50 million reduction in our sustaining capital - A reduction of $25 million in our exploration spend - $8 million of savings in our corporate overheads As part of the Review process, we are reassessing our staffing requirements both at our mine sites and our offices in order to ensure we have the optimal structure, as well as the appropriate mix of employees and contractors. This incorporates the ongoing progress we have made in increasing the proportion of Tanzanian employees in our workforce to the extent that over the last 12 months we have reduced the level of international employees by 16%. This substantially lowers the turnover in our workforce and improves the cost profile, and this is an area where we will continue to work to make further improvements. The second workstream is focused on the other operating costs which represent the largest area of expenditure within our organisation and we have identified a range of opportunities where we believe there is significant cost reduction potential. Project teams have been formed for each of these areas and are working to identify and quantify specific cost reduction opportunities within each of the following areas: - Maintenance - Aviation, Camp Services, Travel, Vehicles and Administration - Consumables - Contractor and External Services - Energy - Security The third workstream is the complete review of our life of mine plans at each of our operations and the options available to ABG to enhance cash flow generation in the near term. The review is aimed at optimising production levels with the amounts of operating and sustaining capital required in order to maximise returns. Given the recent movements in the gold price, scenarios are also being run at different gold prices in order to ensure maximum flexibility at various potential price levels. We are also reviewing all future expansion capital as part of the overall Review process. The CIL Expansion project at Bulyanhulu is well underway and scheduled to deliver first production and positive cash flows in Q1 next year, with an annualised run rate of 40,000 ounces. The project, which is substantially financed through a $142 million export credit facility at 250 basis points over LIBOR, remains on budget and schedule, with $48 million spent to date. With respect to other projects, our intention is to review them in light of the current cash generation of the business and other capital commitments. While we have made substantial progress on the Operational Review, we are critically aware of the need to deliver the most effective structure for the business in the shortest timeframe possible. To this end, we have decided to augment our internal capacity by engaging KPMG to provide both additional support and an external perspective on our findings to ensure we meet the timelines to which we have committed. This will also enable us to benefit from the experience of the KPMG team in carrying out similar engagements elsewhere in the sector. Commenting, CEO Greg Hawkins said: "After a challenging period in 2012, it has been encouraging to hit our targets in the last two quarters. We have made significant improvements to the Buzwagi operation, whileNorth Mara is performing well andBulyanhulu is on track for recovery. We are making good progress on cost reductions through the Operational Review and we are well underway with a complete life of minereview of the assets. We have moved to shut our high cost mine at Tulawaka, are on track with our expansion project at Bulyanhulu and are determined to ensure that ABG can generate robust cash flows over the long term". ENQUIRIES For further information contact: African Barrick Gold plc +44 (0)20 7129 7150 Andrew Wray, Head of Corporate Development & Investor Relations Giles Blackham, Investor Relations Manager RLM Finsbury +44 (0)20 7251 3801 Faeth Birch Charles Chichester About ABG ABG is Tanzania's largest gold producer and one of the five largest gold producers in Africa. We have four mines, all located in Northwest Tanzania, and several exploration projects at various stages of development in Tanzania and Kenya. We have a high-quality asset base, solid growth opportunities and a clear strategy of: * driving operating efficiencies to optimise production from our existing asset base; * growing through near mine expansion and development of advanced-stage projects; and * organic greenfield growth and acquisitions in Africa. Maintaining our licence to operate through acting responsibly in relation to our people, the environment and the communities in which we operate is central to achieving our objectives. ABG is a UK public company with its headquarters in London. We are listed on the Main Market of the London Stock Exchange under the symbol ABG and have a secondary listing on the Dar es Salaam Stock Exchange. Historically and prior to our initial public offering (IPO), our operations comprised the Tanzanian gold mining business of Barrick Gold Corporation, our majority shareholder. ABG reports in US dollars in accordance with IFRS as adopted by the European Union, unless otherwise stated in this report. Forward-looking statements This announcement is for information purposes only and does not constitute an invitation or offer to underwrite, subscribe for or otherwise acquire or dispose of any securities of ABG in any jurisdiction. This announcement 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 and information regarding plans, objectives and expectations with respect to future production, projects, operations, costs, products, services and the operational review, and statements regarding future performance. Forward-looking statements are generally identified by the words "plans," "expects," "anticipates," "believes," "intends," "estimates" "will" 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 ABG, which could cause actual results and developments to differ materially from those expressed in, or implied by, the forward-looking statements. Factors that could cause or contribute to differences between the actual results, performance and achievements of ABG include, but are not limited to, changes in political, economic and business conditions in countries in which ABG operates or may in the future operate, industry trends and developments, competition, fluctuations in the spot and forward price of gold and copper or certain other commodities (such as diesel fuel and electricity) , changes in legislation or regulation, currency fluctuations (including the US dollar, South African rand, Tanzanian shilling and Kenyan shilling exchange rates), ABG's ability to successfully integrate acquisitions, ABG'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 timely and successfully process its mineral reserves, operating or technical difficulties in connection with mining or development activities, delays and technical challenges associated with the completion of projects, its ability to successfully implement the operational review , risk of trespass, theft and vandalism, changes ABG's its business strategy as well as risks and hazards generally associated with the business of mineral exploration, development, mining and production. Although ABG's management believes that the expectations reflected in such forward-looking statements are reasonable, ABG cannot give assurances that such statements will prove to be correct. Accordingly, investors should not place reliance on forward looking statements in this announcement. Any forward-looking statements in this announcement 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, ABG explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this announcement that may occur due to any change in ABG's expectations or to reflect events or circumstances after the date of this announcement. Nothing in this announcement should be construed as a profit forecast or estimate. END
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AFRICAN BARRICK GOLD PLC: Update on the Operational Review
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