AFRICAN BARRICK GOLD PLC: 3rd Quarter Results

AFRICAN BARRICK GOLD 


    30 October 2013

Results for the three months ended 30 September 2013 (Unaudited)

Based on IFRS and expressed in US Dollars (US$)
    African Barrick Gold plc ("ABG'') reports third quarter results


"I am delighted to present a strong set of operational results in my first
report as CEO of ABG. The continued focus on operational delivery and the
implementation of cost saving programmes across the group has resulted in our
strongest quarter this year", said Brad Gordon, Chief Executive Officer of
African Barrick Gold. "I am impressed with the quality of our assets, the
initiatives implemented to date and the people at our operations. We need to
continue and deepen this operational discipline to ensure that we achieve
sustainable cash generation. We now expect to exceed the upper end of the
production guidance range of 600,000 ounces for 2013, with the resultant cash
cost per ounce being below the lower end of guidance of US$925 per ounce sold." 
Third Quarter Highlights 
ABG reports net earnings of US$17.8 million (US4.3 cents per share) with
adjusted net earnings2 of US$39.1 million (US9.5 cents per share), after
one-off adjustments mainly relating to the Tulawaka closure and the Operational
Review. Operational cash flow was US$39.9 million. 
Other significant highlights include: 
Q3 gold production1 of 164,719 ounces up 11% on Q3 2012 
Cash costs2 of US$730 per ounce sold, 28% lower than Q3 2012 
Revenue of US$221.1 million and EBITDA of US$64.8 million 
All-in sustaining costs2 of US$1,275 per ounce sold, down 25% on Q3 2012 
Cash balance of US$289 million as at 30 September 2013 
On track to deliver target of over US$100 million in cost reductions by the end
of 2013 
Bulyanhulu CIL Expansion project remains on track for first production in Q1
2014 
Operational Review Update 
We have continued to make good progress on the implementation of the
Operational Review and have continued to see a strong downward trend in both
our cash costs and all-in sustaining costs, which were down 17% and 7%
respectively on Q2 2013 and 28% and 25% respectively on Q3 2012. A revamped
management team has been appointed to accelerate and deepen the Operational
Review and ensure a continued focus on effectively managing our cost base going
forward. 
Progress has been made in each of the below areas: 
Operating cost reductions - Of the US$95 million of savings targeted, we remain
on track to achieve the planned 30% in 2013, with US$21 million saved to date
on an annualised basis. Major savings to date have been in maintenance, camp
services, consumables and security. 
Capital discipline - Achieved US$27 million of sustaining capital savings to
date against the same period in 2012 and continue to expect to achieve the
balance of the previously communicated saving of US$50 million by year end. 
Organisational structure - Significant changes to staffing structures and
levels resulting in a reduction of 27% of international employees year to date
and a reduction of 37% in contractors on site. 
Corporate overhead cost reductions - To date, savings of US$12 million have
been realised through simplifying the corporate structure and reducing the
support offices. A further saving of US$3 million is expected to be achieved in
Q4 2013, in line with the overall target of $15 million for 2013. 
Exploration - We have so far achieved US$18 million of our targeted savings of
US$25 million for 2013. 
Mine planning deliverability - Following the optimisation of the Buzwagi mine
plan last quarter, we have decided to defer Gokona Cut 3 at North Mara,
representing 628koz of the mine's reported reserves, while we finalise the
feasibility study into the alternative of mining out this reserve and
additional identified resource through an underground operation. 
Key statistics 
                                       Three months ended 30  Nine months 
ended 30 
                                             September             
September       
                                                                             
  
(Unaudited)                                     2013       20124       2013     
 20124 
                                                                             
  
Tonnes mined (thousands of tonnes)            13,388      12,992     42,530     
34,359 
                                                                             
  
Ore tonnes mined (thousands of tonnes)         1,697       1,514      5,099     
 4,804 
                                                                             
  
Ore tonnes processed (thousands of tonnes)     2,114       1,890      6,162     
 5,632 
                                                                             
  
Process recovery rate (percent)                88.3%       89.5%      88.6%     
 87.6% 
                                                                             
  
Head grade (grams per tonne)                     2.7         2.7        2.7      
2.8 
                                                                             
  
Attributable gold production (ounces)1       164,719     147,786    476,557    
445,528 
                                                                             
  
Attributable gold sold (ounces)1             161,631     147,026    481,565    
449,667 
                                                                             
  
Copper production (thousands of pounds)        2,838       2,483      8,422     
 8,609 
                                                                             
  
Copper sold (thousands of pounds)              2,448       2,325      8,561     
 8,284 
                                                                             
  
Cash cost per tonne milled (US$)2                 56          79         66      


    75
                                                                                


  
Per ounce data (US$)                                                             


      
                                                                                
      


 Average spot gold price3                  1,326       1,652      1,456     
 1,652 


                                                                                
      


 Average realised gold price2              1,310       1,688      1,423     
 1,657 


                                                                                
      


 Total cash cost2                            730       1,012        845      
934 


                                                                                
      


 All-in sustaining cost2                   1,275       1,709      1,429     
 1,563 
                                                                             
  
Average realised copper price (US$/pound)       3.20        3.88       3.22     
  3.63 
                                                                             
   
Financial results 
                                     Three months ended 30  Nine months 
ended 30  


                                               September              September 
     
                                                                                


 
(Unaudited)                                    2013      20124        2013      
20124 
                                                                             
 
(US$'000)                                                                        


     
                                                                                


 
Revenue                                     221,145    264,927     720,897    
799,395 
                                                                             
 
Cost of sales                             (158,650)  (205,231)   (573,534)  
(579,968) 
                                                                             
 
Gross profit                                 62,495     59,696     147,363    
219,427 
                                                                             
 
Corporate administration5                   (9,593)   (13,278)    (24,502)   
(38,264) 
                                                                             
 
Exploration and evaluation costs            (3,449)    (7,314)    (11,003)   
(17,698) 
                                                                             
 
Corporate social responsibility expenses    (3,243)    (2,963)    (10,162)    
(9,713) 
                                                                             
 
Impairment charges                                -          -   (927,690)       


    -
                                                                                


 
Other charges                              (12,625)      (418)    (34,717)    
(4,693) 
                                                                             
 
Profit/ (loss) before net finance cost       33,585     35,723   (860,711)    
149,059 
                                                                             
 
Finance income                                   81        595       1,086      
1,674 
                                                                             
 
Finance expense5                            (2,417)    (2,427)     (7,192)    
(7,740) 
                                                                             
 
Profit/ (loss) before taxation               31,249     33,891   (866,817)    
142,993 
                                                                             
 
Tax (expense)/ credit                      (15,921)   (10,436)     168,727   
(45,458) 
                                                                             
 
Net profit / (loss) for the period           15,328     23,455   (698,090)     
97,535 
                                                                             
 
Attributed to:                                                                   


     
                                                                                


 
- Non-controlling interests                 (2,502)      (367)    (14,690)       


    3
                                                                                


 
- Owners of the parent (net earnings/                                            
 
(loss))                                      17,830     23,822   (683,400)     
97,532 


                                                                                
     
    Other Financial information


                                             Three months   Nine months 
ended 


                                                   ended 30            30       
                                                                                  
                                                     September        September   


                                                                               
(Unaudited, in US$'000 unless otherwise stated)    2013   20124      2013   
20124 
                                                                             
EBITDA2,5                                        64,769  76,726   195,541 
261,143 
                                                                             
Adjusted EBITDA2,5                               77,508  76,726   217,414 
261,143 
                                                                             
Net earnings / (loss)                            17,830  23,822 (683,400)  
97,532 
                                                                             
Earnings / (loss) per share (EPS) (cents)           4.3     5.8   (166.6)    
23.8 
                                                                             
Adjusted net earnings2                           39,052  23,822    78,386  
97,532 
                                                                             
Adjusted net earnings per share (AEPS) (cents)2     9.5     5.8      19.1    
23.8 
                                                                             
Dividend per share (cents)                            -       -       1.0     
4.0 
                                                                             
Cash and cash equivalents                       288,663 452,447   288,663 
452,447 
                                                                             
Cash generated from operating activities         39,851  45,259   138,922 
172,361 
                                                                             
Operating cash flow per share (cents)2              9.7    11.0      33.9    
42.0 
                                                                             
Capital expenditure6                             83,040  82,087   269,968 
223,786 
                                                                             
Draw down of long term debt (Borrowings)         30,000       -   110,000       
- 
                                                                             


    

1 Production and sold ounces reflect equity ounces which exclude 30% of
Tulawaka's production and sales base.

2Average realised gold price, total cash cost per ounce, all-in sustaining cost
per ounce, cash cost per tonne milled, EBITDA, adjusted EBITDA, adjusted net
earnings, adjusted net earnings per share and operating cash flow per share are
non-IFRS financial performance measures with no standard meaning under IFRS.
Refer to "Non IFRS measures"' on page 11 for definitions.

3Reflect the London PM fix price.

4Restated for the impact of capitalised stripping due to the adoption of IFRIC
20.

5 Three and nine months ended 30 September 2012 restated to reclassify bank
charges from corporate administration to finance expense.

6Includes non-cash reclamation asset adjustments and finance lease purchases in
2012. 
    Third Quarter Review


During the third quarter we saw continued strong performance at both Buzwagi
and North Mara with production up 47% and 28% respectively on Q3 2012. At
Bulyanhulu, we continued to progress the recovery plan, delivering production
of 52,126 ounces, broadly in line Q2 2013, but 8% down on Q3 2012 due to lower
throughput. 
Buzwagi continued to show strong year on year improvements on all key operating
metrics as it began to implement the new mine plan. Head grade was 17% higher
than in Q3 2012 due to the impact of the re-engineered mine plan focusing on
higher return areas. When combined with mill throughput, which was up 31% on Q3
2012, we achieved production of 44,408 ounces, a 47% increase on Q3 2012. 
At North Mara, mining continued from higher grade zones in the Gokona pit
resulting in a head grade of 3.4 grams per tonne (g/t). Increased throughput
offset a decrease in mill recovery rates to 86.9%, predominantly as a result of
inconsistency experienced in the oxygen plant during the quarter. As a result,
production for the quarter amounted to 67,895 ounces, an increase of 28% on Q3
2012. 
At Bulyanhulu, reduced equipment availability and access to stopes resulted in
a 3% decrease in ore tonnes hoisted, which, combined with plant maintenance
resulted in throughput being 9% lower than in Q3 2012. This resulted in
production of 52,126 ounces for the quarter, an 8% decrease on Q3 2012. 
Total tonnes mined amounted to 13.4 million tonnes, an increase of 3% on Q3
2012, driven by increased mining rates at North Mara, which was partially
offset by lower mining rates at Buzwagi due to the change in mine plan. 
Ore tonnes mined of 1.7 million tonnes were 12% higher than in Q3 2012 as a
result of the increase in ore tonnes mined at North Mara and at Buzwagi. 
Ore tonnes processed amounted to 2.1 million tonnes, an improvement of 12% on
Q3 2012. Increased throughput at Buzwagi, achieved as a result of a stable
power supply and process plant improvements, was partially offset by lower
throughput at Tulawaka due to the closure of the site, and at Bulyanhulu due to
insufficient ore from underground. 
Group head grade for the quarter of 2.7 g/t was in line with Q3 2012. The
increased grade from Gokona at North Mara was offset by an increased proportion
of group throughput being at Buzwagi at a lower grade. 
Total cash costs of US$730 per ounce sold were 28% lower than Q3 2012. The
decrease was primarily due to decreased labour costs as a result of the
Operational Review (US$48/oz), lower site G&A costs (US$29/oz) and lower
maintenance costs, achieved as a result of the reduction in mining activity at
Buzwagi and our ongoing general focus on cost cutting and improved maintenance
scheduling (US$21/oz). In addition, cash costs benefitted from increased
capitalised stripping and a drawdown of low cost inventories (US$99/oz). 
All-in sustaining cost per ounce sold ("AISC") of US$1,275 was 25% lower than
Q3 2012, driven by lower cash costs, corporate administration costs,
exploration costs and sustaining capital expenditures combined with a higher
production base. This was partially offset by the increase in capitalised
development expenditures. 
Cash cost per tonne milled of US$56 decreased by 29% on Q3 2012 (US$79 per
tonne), primarily as a result of the above factors and the increased group
throughput. 
Gold sales amounted to 161,631 ounces, an increase of 10% on Q3 2012, and 2%
lower than production for the quarter due to the timing of shipments at quarter
end.   
Copper production for the quarter of 2.8 million pounds was 14% higher than in
Q3 2012. Increased production at Buzwagi was partially offset by lower
production at Bulyanhulu. 
Revenue of US$221.1 million was 17% lower than Q3 2012 as the increase in gold
sales achieved for the quarter was more than offset by a 22% decrease in the
average realised gold price (US$1,310 per ounce sold for Q3 2013 when compared
to US$1,688 per ounce sold in Q3 2012). Realised prices were below the average
gold price for the quarter due to sales being skewed towards the end of the
quarter when the gold price was lower. 
EBITDA of US$64.8 million was 16% lower than Q3 2012 as a result of increased
other charges of US$12.2 million due to the allocation of non-operational
Tulawaka costs, including retrenchments, costs associated with the Operational
Review and increased unrealised losses on currency hedges not qualifying for
hedge accounting. Adjusted EBITDA of US$77.5 million was in line with Q3 2012. 
Capital expenditure for the quarter amounted to US$83.0 million, in line with
that of Q3 2012 (US$82.1 million). Key capital expenditures included the
Bulyanhulu CIL Expansion project (US$18.1 million), capitalised stripping at
Buzwagi and North Mara (US$31.0 million), capitalised underground development
at Bulyanhulu (US$10.6 million) and group sustaining capital investments in
mining equipment, plant and tailings and infrastructure of US$19.4 million. 
Other developments 
Operational Review 
We have made good progress on the implementation of the US$185 million of cost
savings outlined in the Operational Review in July and remain on track to
deliver our target of over US$100 million in cost reductions by the end of
2013. The delivery on the cost savings is highlighted by the consistent
reduction in our AISC over the year to date whilst delivering strong
production. Progress against each of the key areas of the Operational Review is
detailed below: 
1. Operating cost reductions - US$95 million 
Of the US$95 million of savings targeted, we remain on track to achieve the
planned run rate of 30% by the end of 2013, with US$21 million savings achieved
to date on an annualised basis. The balance of the US$95 million is expected to
be achieved by the end of 2014. Key highlights in each operating cost area are: 
Labour structure and controls - reduction of up to 20% on 2012 
Reduction of international workers at Buzwagi from 148 to 51 at as the end of
Q3 2013 
Across the group we have seen a reduction of 37% in contractors on site year to
date 
Procurement - reduction of 5-10% on 2012 
Renegotiation of a consumable contract which is expected to realise annual
savings in excess of US$1.2 million 
Improved pricing standardisation across sites 
Maintenance - reduction of 5-10% on 2012 
Year to date saving of 7% in process plant maintenance due to improved
scheduling 
Reduction in the reliance on original equipment manufacturers for non-critical
spares 
Aviation, Camp Services, Travel, Vehicles and Administration - reduction of
30-40% on 2012 
Reduction of inter-site aviation schedule from 6 days to 5 days a week 
Improved cost control in respect of travel bookings as well as camp and meal
administration  
Consumables - reduction of 5-10% on 2012 
Implementation of short interval controls in the CIL and detoxification plants
to reduce cyanide usage 
Feasibility study for an in-house tyre repair workshop near completion 
Contract Management and External Services - reduction of 5-10% on 2012 
Renegotiation of several major service contracts concluded which will result in
annual savings of US$6.8 million 
Revised contract administration procedures to improve rates and contractor
performance 
Security - reduction of 15-20% on 2012 
33% reduction in number of international employees within the security function 
In-sourcing of related services and a reduction of contractors on site 
2. Capital discipline - US$50 million 
Achieved US$27 million of sustaining capital savings to date against the same
period in 2012 and continue to expect to achieve the balance of the previously
communicated saving of US$50 million by year end. 
3. Corporate overhead cost reductions - US$15 million 
Progress has been made on the simplification of the corporate structure and the
reduction in size of our support offices, with US$12 million of the planned
savings made year to date. The number of staff in our corporate offices has
already been reduced by 30% which has the further benefit of reducing travel
and expense costs. We remain on track to complete the full savings of US$15
million by the end of 2013. 
4. Exploration - US$25 million 
As previously announced we have scaled back our exploration activities in 2013,
resulting in a targeted cost saving of US$25 million when compared to 2012.
Year to date we have achieved a saving of approximately US$18 million as we
have focused our exploration programme on potential high return programmes at
Bulyanhulu and on two targets in the North Mara region. In Kenya we are
undertaking extensive low cost sampling and testing of anomalies in order to
prepare for future programmes. 
5. Mine planning deliverability 
In addition to the review of our operating costs, we are reviewing our life of
mine plans at each operation and the options available to ABG to enhance cash
flow generation in the near term. At Buzwagi we have updated the life of mine
plan to focus on cash flow generation and are currently mining to that plan. 
At North Mara, we have decided to defer Gokona Cut 3, which contains 628koz of
North Mara's reserve base, while we finalise the feasibility study into the
alternative of mining out this reserve and additional identified resource
through an underground operation. We expect to complete this study by the
middle of 2014. 
At Bulyanhulu, the first stage in the future development of the mine, the CIL
Expansion, remains on budget and on time for first production in Q1 2014. As
part of the review of the life of mine of the underground we are assessing the
timing of the Upper East Acceleration and have commenced a deep drilling
exploration campaign to assess potential extension of the mineralisation to the
West of the ore body. 
Senior Leadership Team changes 
During the quarter there were a number of management changes designed to
strengthen the leadership team and ensure continued delivery of the Operational
Review. Brad Gordon was appointed Chief Executive Officer in August 2013 and
brings over 30 years of operational experience. Since his appointment Brad has
also taken day-to-day oversight of operations following the departure of the
former COO, Marco Zolezzi. A replacement as COO will be appointed in due
course. Andrew Wray, formerly Head of Corporate Development and Investor
Relations was also appointed as Chief Financial Officer (CFO) in September
2013. Jaco Maritz, who had been Acting CFO since March 2013, has resumed his
responsibilities as Vice President, Finance.  
Tulawaka Closure Process 
At Tulawaka, we continued with the closure process of the mine. This resulted
in incidental production of 289 ounces for the quarter as the process plant was
closed. We are finalising discussions with the Government on the ultimate
future use of the site, and hope to conclude these by the end of the year. 
Taxation 
During Q3 2013 working capital continued to be adversely affected by the build
up in the indirect tax receivable which has been driven by the abolition of VAT
Relief in Q4 2012 in contravention of our Mineral Development Agreements.
During the quarter the receivable increased by US$22.4 million and the total
indirect tax receivable build up since Q4 2012 amounted to US$98.4 million as
at 30 September 2013. Post period end we received a VAT refund of US$4.8
million against this amount and will be pursuing further refunds. We have also
set up an escrow arrangement for VAT Imports in order to address ongoing
monthly payments in order to prevent a further build up of the amount. We
continue to discuss a similar agreement for VAT levied on domestic goods which
represent approximately 50% of monthly payments. 
Post period end we received a demand from the Tanzanian Revenue Authority
amounting to US$81 million for payment of with-holding tax on historic offshore
dividend payments to shareholders. Management do not believe this is a valid
demand and we will vigorously defend our position. 
Outlook 
Over the past nine months we have delivered improved performance from our
operating portfolio as a result of a continued focus on operational delivery
and cost control. We believe we are well positioned to continue the reduction
in our all in sustaining costs in the fourth quarter and into 2014. 
We now expect full year production to exceed the higher end of guidance of
600,000 ounces with the resultant cash cost per ounce being below the lower end
of guidance of US$925 per ounce sold. 
African Barrick Gold plc                   +44 (0) 207 129 7150 
                                                           
Brad Gordon, Chief Executive Officer                            
                                                           
Andrew Wray, Chief Financial Officer                            
                                                           
Giles Blackham, Investor Relations Manager                      
                                                            
                                                           
Bell Pottinger                             +44 (0) 207 861 3232 
                                                           
Charlie Vivian                                                  
                                                           
Daniel Thöle                                                    
                                                            
About ABG  
ABG is Tanzania's largest gold producer and one of the five largest gold
producers in Africa. We have three producing 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 optimising, expanding and growing our
business. 
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. 
Conference call  
A conference call will be held for analysts and investors on 30 October 2013 at
12:00 GMT with the dial-in details as follows: 
                                                                            
                                                                           
Participant dial in:                                                            
                                     +44 (0) 203 003 2666 / +1 866 843 4608 
                                                                           
Password:                                 ABG                                   
                                                                            
A recording of the conference call will be made available on ABG's website, 
www.africanbarrickgold.com, 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, projects, operations, costs, products and
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 contained in this report. Factors
that could cause or contribute to differences between the actual results,
performance and achievements of ABG 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 ABG conducts or may in the
future conduct business, industry trends and developments, competition,
fluctuations in the spot and forward price of gold and copper or certain other
commodity prices (such as diesel fuel and electricity), currency fluctuations
(including the US dollar, South African rand, Kenyan shilling and Tanzanian
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 process its mineral reserves successfully and in
a timely manner, ABG'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 ABG's business strategy including, without limitation,
ABG's successful implementation of the Operational Review, 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
generally . 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 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, ABG 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, changes in expectations or circumstances, 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 ABG's profits
or earnings per share for any future period will necessarily match or exceed
the historical published profits or earnings per share of ABG. 
Bulyanhulu 
Key statistics 
                                                      Three months      
Nine months    
                                                          ended            
ended       
                                                      30 September      30 
September   
                                                                             
      
(Unaudited)                                                 2013   2012       
2013    2012 
                                                                             
      
Underground ore tonnes hoisted                  Kt           232    240        
650     746 
                                                                             
      
Ore milled                                      Kt           228    250        
642     782 
                                                                             
      
Head grade                                      g/t          7.8    7.8        
7.7     8.3 
                                                                             
      
Mill recovery                                   %          90.5%  90.6%      
90.8%   90.7% 
                                                                             
      
Ounces produced                                 oz        52,126 56,912    
145,100 188,499 
                                                                             
      
Ounces sold                                     oz        50,767 55,687    
138,569 189,104 
                                                                             
      
Cash cost per ounce sold                        US$/oz       769    910        
936     762 
                                                                             
      
AISC per ounce sold                             US$/oz     1,183  1,425      
1,437   1,163 
                                                                             
      
Cash cost per tonne milled                      US$/t        171    202        
202     184 
                                                                             
      
Copper production                               Klbs       1,269  1,414      
3,507   4,897 
                                                                             
      
Copper sold                                     Klbs       1,169  1,349      
3,204   4,602 
                                                                             
      
Capital expenditure                             US$('000) 35,969 26,924    
118,830  67,163 
                                                                             
      
  - Sustaining capital                          US$('000)  5,314  9,859     
20,860  24,918 
                                                                             
      
  - Capitalised development                     US$('000) 10,576 11,244     
34,678  33,370 
                                                                             
      
  - Expansionary capital                        US$('000) 20,910  4,799     
73,331   5,967 


                                                                                
          


                                                      36,800 25,902    
128,869  64,255 
                                                                             
      
  - Non-cash reclamation asset      adjustments US$('000)  (831)  1,022   
(10,039)   2,908 


                                                                                
          
    Operating performance

Bulyanhulu delivered solid performance as it progressed against the recovery
plan, producing 52,126 ounces during the quarter, in line with Q2 2013, and
down 8% on Q3 2012. Ore mined remained constrained due to reduced equipment
availability and delays in accessing mining faces. Plant maintenance led to
increased downtime, which when combined with the reduced ore hoisted resulted
in throughput being 9% below that achieved in Q3 2012. The previous delays in
paste-fill activity resulted in limited access to high grade stopes during the
early part of the quarter, although the situation improved as the quarter
progressed.

Copper production for the quarter of 1.3 million pounds was 10% lower than in
Q3 2012, primarily due to a lower copper grade and lower throughput.

Cash costs per ounce sold for the quarter of US$769 were 15% lower than in Q3
2012 (US$910 per ounce), driven by lower maintenance costs, lower contracted
services, lower labour costs, and lower cost overheads.

AISC per ounce sold of US$1,183 per ounce sold was 17% below Q3 2012 as a
result of the lower cash cost base and lower capitalised development costs.

Cash costs per tonne milled decreased to US$171 in Q3 2013 (US$202 in Q2 2012)
as a result of the lower costs as discussed above.

Capital expenditure for the quarter of US$36.0 million was US$9.0 million
higher than in Q3 2012 (US$26.9 million) primarily as a result of the
expansionary capital spend on the CIL Expansion project (US$18.1 million) and
final payments on long lead items ordered in Q4 2012 for the Upper East project
(US$2.5 million). Included in capital expenditure is a negative non-cash
reclamation adjustment of US$0.8 million.
    Buzwagi
    Key statistics


                                                      Three months     Nine 
months   
                                                          ended           
ended      
                                                      30 September    30 
September   
                                                                             
    
(Unaudited)                                                 2013  2012#     
2013   2012# 
                                                                             
    
Tonnes mined                                    Kt         7,628  8,664   
24,933  20,655 
                                                                             
    
Ore tonnes mined                                Kt         1,001    800    
2,502   2,908 
                                                                             
    
Ore milled                                      Kt         1,165    888    
3,455   2,653 
                                                                             
    
Head grade                                      g/t          1.4    1.2      
1.3     1.4 
                                                                             
    
Mill recovery                                   %          87.3%  88.3%    
87.9%   85.2% 
                                                                             
    
Ounces produced                                 oz        44,408 30,211  
130,154 100,942 
                                                                             
    
Ounces sold                                     oz        40,599 32,809  
136,966 104,058 
                                                                             
    
Cash cost per ounce sold                        US$/oz     1,012  1,264      
946   1,172 
                                                                             
    
AISC per ounce sold                             US$/oz     1,436  2,369    
1,582   1,927 
                                                                             
    
Cash cost per tonne milled                      US$/t         35     47       
38      46 
                                                                             
    
Copper production                               Klbs       1,569  1,069    
4,915   3,713 
                                                                             
    
Copper sold                                     Klbs       1,279    975    
5,357   3,683 
                                                                             
    
Capital expenditure*                            US$('000) 14,506 31,982   
69,692  68,507 
                                                                             
    
  - Sustaining capital                          US$('000)  6,623 14,716   
27,280  36,548 
                                                                             
    
  - Capitalised development                     US$('000)  7,986 16,267   
49,324  28,963 


                                                                                
        


                                                      14,609 30,983   
76,604  65,511 
                                                                             
    
  - Non-cash reclamation asset      adjustments US$('000)  (103)    999  
(6,912)   2,996 


                                                                                
        


#Restated for the impact of capitalised stripping due to the adoption of IFRIC
20. 


    Operating performance

As announced in July, we have re-engineered the mine plan at Buzwagi to
significantly reduce the AISC of the mine and to enable positive free cash
generation. We began to implement the new plan during Q3 2013 and as expected
have seen a positive impact on the cost base.

Total tonnes mined of 7.6 million tonnes were 10% lower than in Q2 2013 and 12%
lower than in Q3 2012 as a result of the change in mine plan. Given the focus
on higher return areas under the new plan, ore tonnes mined were 25% higher
than in both Q2 2013 and Q3 2012.

During Q3 2013 the mill continued to operate above the nameplate capacity and
saw a 31% increase in tonnes milled over Q3 2012. During the quarter mill feed
was a blend of mined ore and lower grade stockpiles resulting in a blended
grade of 1.4 g/t, which was 17% higher than in Q3 2012. As planned, the mill
continues to operate largely on self generated power in order to mitigate the
instability of grid power. 

As a result of both the improved throughput and grade, production of 44,408
ounces was 47% higher than in Q3 2012. Gold ounces sold during the quarter
trailed production by 9% due to the timing of production and concentrate
shipments leaving site.

Copper production for the quarter of 1.6 million pounds was 47% above
production in Q3 2012. This was primarily due to the increased throughput.

Cash costs for the quarter were US$1,012 per ounce sold compared to US$1,264 in
Q3 2012. Cash costs have been positively affected by the increased production
base, lower contracted services costs due to the lower mining activity and the
renegotiation of contracts resulting in lower rates and a reduction in labour
costs due to a reduction in mainly international employees.

AISC per ounce sold of US$1,436 per ounce decreased by 12% on Q2 2013 and 39%
on Q3 2012. This was due to the overall lower cost base and decreased
capitalised stripping costs and as a result of the change in mine plan. Cash
cost per tonne milled of US$35 was 26% below Q3 2012 due to increased
throughput, combined with lower direct mining costs.

Capital expenditure for the quarter of US$14.5 million was 55% lower than in Q3
2012, driven by lower sustaining capital and capitalised stripping costs as a
result of the new mine plan.  

North Mara
    Key statistics


                                                      Three months      
Nine months   
                                                          ended            
ended      
                                                      30 September     30 
September   
                                                                             
     
(Unaudited)                                                 2013  2012#      
2013   2012# 
                                                                             
     
Tonnes mined                                    Kt         5,528  4,057    
16,923  12,603 
                                                                             
     
Ore tonnes mined                                Kt           464    443     
1,923   1,016 
                                                                             
     
Ore milled                                      Kt           720    709     
2,000   2,046 
                                                                             
     
Head grade                                      g/t          3.4    2.6       
3.5     2.4 
                                                                             
     
Mill recovery                                   %          86.9%  88.3%     
87.1%   83.9% 
                                                                             
     
Ounces produced                                 oz        67,895 53,120   
196,373 129,996 
                                                                             
     
Ounces sold                                     oz        69,695 50,200   
199,895 129,800 
                                                                             
     
Cash cost per ounce sold                        US$/oz       532    912       
667     955 
                                                                             
     
AISC per ounce sold                             US$/oz     1,199  1,517     
1,274   1,733 
                                                                             
     
Cash cost per tonne milled                      US$/t         52     65        
67      61 
                                                                             
     
Capital expenditure*                            US$('000) 33,073 13,105    
80,506  61,059 
                                                                             
     
  - Sustaining capital                          US$('000) 10,862  9,405    
34,824  30,583 
                                                                             
     
  - Capitalised development                     US$('000) 23,026  3,218    
51,943  24,184 
                                                                             
     
  - Expansionary capital                        US$('000)      -      -       
504   4,557 


                                                                                
         


                                                      33,888 12,623    
87,271  59,324 
                                                                             
     
  - Non-cash reclamation asset      adjustments US$('000)  (815)    482   
(6,765)   1,735 
                                                                             
      
# Restated for the impact of capitalised stripping due to the adoption of IFRIC
20. 
Operating performance 
North Mara continued its strong performance from H1 2013, and delivered gold
production of 67,895 ounces for the quarter, an increase of 6% on Q2 2013 and
28% on Q3 2012. Gold ounces sold amounted to 69,695 ounces for the quarter,
exceeding production by 3% as a result of the sale of inventory on hand at the
end of Q2 2013.   
Positive reconciliations from grade control drilling continued during the
quarter which resulted in reduced ore tonnes mined, but an increase in mined
grade. Head grade of 3.4 g/t remained 31% above Q3 2012, but was marginally
below Q2 2013 due to the blending of lower grade stockpiles. We expect to see a
reduction in the grade of ore mined and consequently in head grades towards the
end of the year and into Q1 2014. 
Throughput was 2% higher than in Q3 2012 driven by improved availability in the
mill. Recoveries of 86.9% were 2% lower than in Q3 2012, primarily as a result
of instability experienced in the oxygen plant during the quarter. In Q4 2013
we will undertake a planned major shutdown of the crusher which will result in
two weeks of mill downtime. 
Total tonnes mined for the quarter amounted to 5.5 million tonnes, 36% higher
than in Q3 2012. Ore tonnes mined of 464,000 were marginally higher than in Q3
2012 as a result of the waste stripping programme undertaken in 2012 and
changes to the mine plan as a result of the grade control model. 
Cash costs were US$532 per ounce sold compared to US$912 in Q3 2012. The
decrease in cash costs per ounce was driven by the increased production base
and increased capitalised stripping. This was slightly offset by increased
maintenance and energy costs given increased mining and processing activities. 
AISC per ounce of US$1,199 was 21% lower than in Q3 2012 as a result of the
combined effects of lower cash costs and the increase in ounces produced,
slightly offset by the increase in capitalised striping costs. As a result of
the above and combined with the increased throughput, cash cost per tonne
milled of US$52 was 20% lower than in Q3 2012. 
Capital expenditure for the quarter of US$33.1 million was 152% higher than in
Q3 2012. Key capital expenditure included capitalised stripping (US$23.0
million) and investments in mine equipment, tailings and infrastructure (US$8.8
million). 
As part of the ongoing life of mine review, we have deferred the mining of
Gokona Cut 3 while we finalise the feasibility study into the alternative of
mining out this reserve and additional identified resource through an
underground operation. We expect to complete this study by the middle of 2014.
This option would mine the majority of the 628koz of reserve contained in the
cutback, which was not scheduled to provide meaningful production until 2017,
and would significantly reduce life of mine land requirements. We have
recommenced mining in the Nyabirama pit having been granted a permit to
undertake controlled blasting and made further progress on land acquisitions
around the Gokona pit, spending US$6.7 million on land during the quarter. 
We have continued to progress the lifting of the Environmental Protection Order
("EPO") during the quarter and in October commenced a community education
programme which is the last step ahead of the granting of discharge permits. 
Exploration and Development Update 
As previously announced as part of the Operational Review we have scaled back
our exploration and evaluation budget for 2013 to US$21 million, which is a
reduction of 54% on the 2012 budget (US$46 million). The majority of work this
year is based around deep drilling at Bulyanhulu and targeted greenfields
exploration in both Kenya and at Dett-Ochuna and Tagota in Tanzania. We have
continued to progress the CIL Expansion project at Bulyanhulu and retain the
optionality to progress our other growth projects within the portfolio. 
Bulyanhulu CIL Expansion Project 
The Bulyanhulu CIL Expansion project continues to progress well and remains on
track for first production in Q1 2014. We remain on budget, with US$88.2
million spent in total to date on the project, of which US$18.1 million was
incurred in Q3 2013. The project is predominantly funded by a US$142 million
debt facility of which US$110 million has been drawn down to date. 
Project focus during Q3 2013 was on the progression of civil work and the
commencement of the construction of the structural steel works. The key focus
for Q4 2013 is to accelerate the steel construction, commence the electrical/
instrumentation works and to take timely delivery of the last materials at site
required for commissioning during Q1 2014. 
During the quarter we also commenced the first phase of construction of the new
tailing storage facility, in order to hold the expanded CIL tailings, as
required to support the operation of the expanded CIL plant following
commissioning. 
Exploration 
Tanzania 
Bulyanhulu Deeps West 
During the quarter we commenced drilling of the first of three deep diamond
core holes west of the Bulyanhulu mine targeting the extension of Reef 1 gold
mineralisation. The planned programme is comprised of approximately 20,000
metres of diamond core drilling from three parent holes and 25 daughter holes
utilising navigational drilling. The holes are testing the extensions of the
Reef 1 structure from 400 metres to 1,200 metres west of the current Bulyanhulu
resource, targeting a new zone and plunge extensions of the Main Zone within
the mine to depths of between 1.0km and 2.5km vertical. Drilling on this target
commenced late in Q3 2013 with a total of 718 metres of diamond core drilling
completed at the end of September. 
Kenya 
West Kenya JV Project 
Exploration programmes in Kenya during Q3 2013 continued to focus on target
generation, mapping, soil sampling and rock chip sampling across selected
regional prospects in order to delineate and validate targets for follow up
programmes. We also commenced a 25,000 metre Aircore drilling programme that is
targeting existing priority gold-in-soil anomalies and favourable structural
corridors beneath transported cover. 
During the quarter a total of 4,967 soil samples were collected across the
Kakamega Dome and Lake Zone gold camps on broad (400 metre and 800 metre)
spaced grids, and more than 20 new gold-in-soil anomalies have now been
delineated for infill sampling and/or Aircore drilling. 
Aircore drilling to test existing soil anomalies throughout the Kakamega Dome
and Lake Zone gold camps commenced in late Q3 with a total of 28 holes
completed for 482 metres. To date only the target area around the historic
Rosterman mine has been drilled. The aim of the aircore programme is to
establish camp-scale targets for more advanced stage reverse circulation and
diamond core drill testing during H2 2014. 


    Non IFRS Measures

ABG has identified certain measures in this report that are not measures
defined under IFRS. Non-IFRS financial measures disclosed by management are
provided as additional information to investors in order to provide them with
an alternative method for assessing ABG's financial condition and operating
results. These measures are not in accordance with, or a substitute for, IFRS,
and may be different from or inconsistent with non-IFRS financial measures used
by other companies. These measures are explained further below.

Average realised gold price per ounce sold is a non-IFRS financial measure
which excludes from gold revenue:

Unrealised gains and losses on non-hedge derivative contracts;

Unrealised mark-to-market gains and losses on provisional pricing from copper
and gold sales contracts; and

Export duties.

Cash cost per ounce sold is a non-IFRS financial measure. Cash costs include
all costs absorbed into inventory, as well as royalties, by-product credits,
and production taxes, and exclude capitalised production stripping costs,
inventory purchase accounting adjustments, unrealised gains/losses from
non-hedge currency and commodity contracts, depreciation and amortisation and
corporate social responsibility charges. Cash cost is calculated net of
co-product revenue.

The presentation of these statistics in this manner allows ABG to monitor and
manage those factors that impact production costs on a monthly basis. ABG
calculates cash costs based on its equity interest in production from its
mines. Cash costs per ounce sold are calculated by dividing the aggregate of
these costs by gold ounces sold. Cash costs and cash costs per ounce sold are
calculated on a consistent basis for the periods presented.

All-in sustaining cost (AISC) is a non-IFRS financial measure. The measure is
in accordance with the World Gold Council's guidance issued in June 2013. It is
calculated by taking cash costs per ounce sold, and adding corporate
administration costs, reclamation and remediation costs for operating mines,
corporate social responsibility expenses, mine exploration and study costs,
capitalised stripping and underground development costs and sustaining capital
expenditure. This is then divided by the total ounces sold. A reconciliation
between cash cost per ounce sold and AISC is presented below:

(Unaudited)                          Three months ended 30 September 2013     
Three months ended 30 September 2012  
                                                                                


                                
(US$/oz sold)                       Bulyanhulu North Mara Buzwagi ABG Group  
Bulyanhulu North Mara Buzwagi ABG Group 
                                                                             
                                
Cash cost per ounce sold                   769        532   1,012       731      


    910        912   1,264     1,019
                                                                                


                                
Corporate administration                    61         33      50        59      


    107         90     123        88
                                                                                


                                
Rehabilitation                               6         22       9        14      


     11         44      22        28
                                                                                


                                
Mine exploration                             3          8       2         6      


     12         30       7        16
                                                                                


                                
CSR expenses                                11         22       3        20      


      6         24       9        20
                                                                                


                                
Capitalised development                    208        330     197       257      


    202         64     496       216
                                                                                


                                
Sustaining capital                         125        252     163       190      


    177        353     449       330
                                                                                


                                
Attributable to outside interests                                       (2)      


                                 (9)
                                                                                


                                
Total                                    1,183      1,199   1,436     1,275     
  1,425      1,517   2,369     1,709 


                                                                                
                                    


(Unaudited)                   Nine months ended 30 September 2013              
Nine months ended 30 September 2012  
                                                                             
                                    (US$/oz sold)         Bulyanhulu   
North Mara    Buzwagi    ABG Group    Bulyanhulu   North Mara   Buzwagi   ABG 
Group
Cash cost per ounce sold     936          667        946          853           
762          955     1,172         939 
Corporate administration      73           37         53           51           
 73           88        90          83 
Rehabilitation                 8           30         18           21           
  9           48        22          34 
    
Mine exploration               4           13          2            7           
  7           19         6          10 
CSR expenses                   7           27          4           21           
  4           36         8          21 
    
Capitalised development      250          260        360          281           
176          186       278         199 
Sustaining capital           158          240        199          202           
132          400       351         282 
Attributable to outside interests                                               
(7)                                (5) 
Total                      1,437        1,274      1,582        1,429          
1,163       1,733     1,927       1,563 
AISC is intended to provide additional information of what the total sustaining
cost for each ounce sold is, taking into account expenditure incurred in
addition to direct mining costs, depreciation and selling costs. 
EBITDA is a non-IFRS financial measure. ABG calculates EBITDA as net profit or
loss for the period excluding: 
Income tax expense; 
Finance expense; 
Finance income; 
Depreciation and amortisation; and 
Impairment charges of goodwill and other long-lived assets.               
EBITDA is intended to provide additional information to investors and analysts.
It does not have any standardised meaning prescribed by IFRS and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with IFRS. EBITDA excludes the impact of cash costs of financing
activities and taxes, and the effects of changes in operating working capital
balances, and therefore is not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other companies may
calculate EBITDA differently. Prior year EBITDA was restated by US$0.6 million
to reflect the reclassification of bank charges from corporate administration
charges to finance expense. 
Adjusted EBITDA is a non-IFRS financial measure. It is calculated by excluding
one-off costs or credits relating to non-routine transactions from EBITDA. It
excludes other credits and charges that individually or in aggregate, if of a
similar type, are of a nature or size that requires explanation in order to
provide additional insight into the underlying business performance. 
EBIT is a non-IFRS financial measure and reflects EBITDA adjusted for
depreciation and amortisation and goodwill impairment charges. 
Adjusted net earnings is a non-IFRS measure. It is calculated by excluding
one-off costs or credits relating to non-routine transactions from net profit
attributed to owners of the parent. It excludes other credits and charges that
individually or in aggregate, if of a similar type, are of a nature or size
that requires explanation in order to provide additional insight into the
underlying business performance. 
Adjusted net earnings per share is a non-IFRS financial measure and is
calculated by dividing adjusted net earnings by the weighted average number of
Ordinary Shares in issue. 
Cash cost per tonne milled is a non-IFRS financial measure. Cash costs include
all costs absorbed into inventory, as well as royalties, by-product credits,
and production taxes, and exclude capitalised production stripping costs,
inventory purchase accounting adjustments, unrealised gains/losses from
non-hedge currency and commodity contracts, depreciation and amortisation and
corporate social responsibility charges. Cash cost is calculated net of
co-product revenue. ABG calculates cash costs based on its equity interest in
production from its mines. Cash costs per tonne milled are calculated by
dividing the aggregate of these costs by total tonnes milled. 
Operating cash flow per share is a non-IFRS financial measure and is calculated
by dividing Net cash generated by operating activities by the weighted average
number of Ordinary Shares in issue. 
Mining statistical information 
The following describes certain line items used in the ABG Group's discussion
of key performance indicators: 
Open pit material mined - measures in tonnes the total amount of open pit ore
and waste mined. 
Underground ore tonnes hoisted - measures in tonnes the total amount of
underground ore mined and hoisted. 
Total tonnes mined includes open pit material plus underground ore tonnes
hoisted. 
Strip ratio - measures the ratio waste–to–ore for open pit material mined. 
Ore milled - measures in tonnes the amount of ore material processed through
the mill. 
Head grade - measures the metal content of mined ore going into a mill for
processing. 
Milled recovery - measures the proportion of valuable metal physically
recovered in the processing of ore. It is generally stated as a percentage of
the metal recovered compared to the total metal originally present. 

END 
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