AFRICAN BARRICK GOLD PLC: Fourth Quarter Report for the 3 months ended 31 Dec 2013
AFRICAN BARRICK GOLD PLC: Fourth Quarter Report for the 3 months ended 31 Dec 2013 AFRICAN BARRICK GOLD
21 January 2014
Fourth Quarter Report for the three months ended 31 December 2013
Based on IFRS and expressed in US Dollars (US$)
African Barrick Gold plc ("ABG'') reports fourth quarter production results
"We are pleased to deliver another strong production quarter together with the fifth successive reduction in quarterly all-in sustaining costs. This is driven by the changes we are implementing to the business with Q4 AISC of US$1,171 per ounce 30% lower than twelve months ago", said Brad Gordon, Chief Executive Officer of African Barrick Gold. "We have comfortably exceeded the top end of our initial production guidance range for 2013 due to strong performances from North Mara and Buzwagi and saw cash costs come in 10% below the bottom of the initial cash cost guidance range. The performance of Bulyanhulu continues to improve with a 10% step up in grade in Q4 2013 and strong cost performance. We are also pleased that the Environmental Protection Order at North Mara has been lifted, removing an operational constraint and underlining ABG's focus on operating responsibly."
* Fourth quarter gold production of 165,374 ounces and sales of 168,177
ounces * Preliminary fourth quarter all-in sustaining cost of US$1,171 per ounce sold, down 30% on Q4 2012 and 8% on Q3 2013 * Preliminary fourth quarter cash costs of US$774 per ounce sold, 19% lower than Q4 2012 * Full year 2013 production of 641,931 ounces with full year sales of 649,742 ounces, 7% above the upper end of 2013 production guidance of 540,000 - 600,000 ounces * Cash balance of approximately US$282 million as at 31 December 2013 * The average realised price of US$1,251 per ounce over the quarter and US$1,379 per ounce for the full year were 26% and 17% respectively lower than the prior year * Agreement reached to transfer Tulawaka to STAMICO, with completion expected in Q1 2014 * Environmental Protection Order at North Mara lifted African Barrick Gold plc Three months ended Year ended 31 December 31 December
(Unaudited) 2013 2012 2013 2012
Tonnes mined (thousands of tonnes) 11,570 13,942 54,100 48,301
Ore tonnes mined (thousands of 2,151 2,266 7,250 7,070 tonnes)
Ore tonnes processed (thousands of 1,817 2,067 7,979 7,698 tonnes)
Process recovery rate (percent) 88.5% 90.0% 88.5% 88.3%
Head grade (grams per tonne) 3.2 3.0 2.8 2.9
Attributable gold production 165,374 180,684 641,931 626,212 (ounces)¹
Attributable gold sold (ounces)¹ 168,177 159,585 649,742 609,252
Average realised gold price per 1,251 1,700 1,379 1,668 ounce sold2 (US$)
Copper production (thousands of 3,548 4,266 11,970 12,875 pounds)
Cash cost per ounce sold2 774 958 827 941 (preliminary)
All in sustaining cost per ounce 1,171 1,675 1,362 1,584 sold2 (US$) (preliminary)
1 Attributable production and sold ounces reflect equity ounces which exclude 30% of Tulawaka's production base.
2 Average realised price, cash cost per ounce sold and all-in sustaining cost per ounce sold are non-IFRS financial performance measures with no standard meaning under IFRS. Refer to "Non-IFRS measures" on page 6 for each definition.
For further information, please visit our website: www.africanbarrickgold.com or contact:
African Barrick Gold plc +44 (0) 207 129 7150 Brad Gordon, Chief Executive Officer Andrew Wray, Chief Financial Officer
Giles Blackham, Investor Relations Manager +44 (0) 207 861 3232 Bell Pottinger Daniel Thöle
ABG is Tanzania's largest gold producer and one of the 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.
A conference call will be held for analysts and investors on 21 January 2014 at 09.00 London time.
The access details for the conference call are as follows:
Participant +44 (0) 203 003 2666 / +1 646 843 4608 dial in:
A recording of the conference call will be made available at 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, operations, costs, products and services, 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 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 in countries in which ABG 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, changes in regulation, 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 its 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 in general. 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 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
Operating update for the three months and year ended 31 December 2013
Attributable gold production for the quarter totalled 165,374 ounces, a slight increase on the third quarter and a 9% decrease on the corresponding quarter of 2012. Lower production was primarily a result of lower grades at Buzwagi compared to Q4 2012, reduced throughput at North Mara due to planned plant downtime and the cessation of operations at Tulawaka. This was partially offset by the increased production at Bulyanhulu driven by a 10% increase in grade.
The improved performance at Bulyanhulu was a result of largely addressing paste fill delivery issues by improving paste plant availability and increasing the number of paste fill lines, which improved access to higher grade stopes. While tonnes hoisted and mill throughput remained in line with the corresponding quarter in 2012, head grade increased by 10% to 7.9 g/t compared to Q4 2012.
At Buzwagi, the process plant continues to operate at nameplate capacity of 12,000 tonnes per day, but overall throughput was impacted by predominantly planned plant downtime during Q4 2013. As a result, throughput was 11% lower than in Q4 2012. Mine grade for the quarter increased as expected, but was 10% lower than the same quarter in 2012 due to focused mining of high grade ore zones in Q4 2012. This also resulted in a 2% decrease in recovery.
At North Mara, as in Q3 2013 we continued to see high grades from mining in Gokona, resulting in a 13% increase in grade compared to Q4 2012. This was offset by a 13% decrease in throughput as a result of planned crusher maintenance downtime in December 2013 and a 3% decrease in recovery.
Gold sold for the quarter was 168,177 ounces, a 5% increase on the corresponding quarter of 2012. Gold ounces sold were 2% higher than gold produced as a result of gold on hand from Q3 2013 being sold.
Tonnes mined for the quarter were 11.6 million compared to 13.9 million in the corresponding quarter of 2012. The decrease was primarily driven by the impact of the implementation of the optimised mine plans at Buzwagi and North Mara.
Tonnes processed in the fourth quarter were 1.8 million tonnes, 12% lower than the corresponding quarter of 2012. The decrease was mainly due to the plant downtime relating to scheduled maintenance at Buzwagi and North Mara.
The average grade processed for the quarter was 3.2 grams per tonne which was 7% higher than the prior year period. The increase in grade was predominantly due to North Mara and Bulyanhulu and was in part offset by lower grade at Buzwagi.
Copper production for the quarter was 3.5 million pounds, 17% lower than the prior year period, driven by lower copper grades at Buzwagi when compared to Q4 2012. This was offset by a slight increase in copper grades at Bulyanhulu.
For the full year, production of 641,931 ounces represented a 3% increase on the prior year and 7% higher than the upper end of 2013 production guidance of 540,000 - 600,000 ounces. Gold sales for the full year were 1% above production at 649,742 ounces.
The cash balance as at 31 December 2013 amounted to approximately US$282 million, with the US$142 million export credit facility fully drawn down at year end.
The average realised price amounted to US$1,251 per ounce for the quarter and US$1,379 per ounce for the full year. This was 26% and 17% respectively lower than the prior year comparisons, reflecting the decrease in the market price.
Transfer of Tulawaka Gold Mine
As previously announced, we have reached an agreement with STAMICO, the Tanzanian State Mining Corporation, whereby STAMICO will acquire the Tulawaka Gold Mine ("Tulawaka") and certain exploration licenses surrounding Tulawaka for consideration of US$4.5 million and the grant of a 2% net smelter royalty on future production in excess of 500,000 ounces, capped at US$500,000.
As part of the agreement, STAMICO will take ownership and management of the rehabilitation fund established as part of the closure plan for the mine, in return for the assumption of all remaining past and future closure and rehabilitation liabilities for Tulawaka, and will indemnify the other parties to the agreement in relation to these liabilities. This will result in a cash payment by ABG to STAMICO of the balance of the rehabilitation fund, which currently stands at US$16.8 million, less the transaction consideration due on completion.
We are currently awaiting final regulatory approvals, and expect the transaction to be completed in Q1 2014.
Lifting of Environmental Protection Order ("EPO") at North Mara
In December 2013 we completed the final step in the lifting of the EPO that has been in force at North Mara since 2009 and received a formal discharge permit from the Lake Victoria Water Board. The award of the discharge permit follows the completion of an extensive joint water sampling programme, rehabilitation of affected areas, a community awareness programme and the commissioning of a water treatment plant at the mine. The removal of the EPO allows ABG to discharge clean water once it has been treated in the water treatment plant at the mine.
Mine site summary
Bulyanhulu Three months ended Twelve months ended
31 December 31 December
(Unaudited) 2013 2012 2013 2012
Underground ore tonnes Kt 222 214 872 959 hoisted
Ore milled Kt 229 230 871 1,012
Head grade g/t 7.9 7.2 7.8 8.0
Mill recovery % 91.2% 89.8% 90.9% 90.6%
Ounces produced oz 53,186 47,684 198,286 236,183
Ounces sold oz 56,735 46,306 195,304 235,410
Copper production `000lbs 1,348 1,206 4,855 6,102
Copper sold `000lbs 1,304 1,293 4,508 5,895 Gold production at Bulyanhulu for the quarter was 53,186 ounces, 12% higher than the prior year period and in line with the previous quarter. The increase in production was primarily due to a 10% improvement in grade compared to Q4 2012, as availability of high grade stopes increased due to improvements in paste filling. Gold ounces sold for the quarter of 56,735 were 7% higher than production due to the sale of concentrate on hand from Q3 2013. For the full year 2013, gold production of 198,286 ounces at Bulyanhulu was 16% lower than the prior year mainly due to lower tonnes mined as a result of reduced equipment and staff availability noted in the first half of the year. This was further impacted by a 3% decrease in grade due to paste fill delays in H1 2013 impacting on the availability of high grade stopes. This has since been addressed and paste filling has recovered to expected levels. Gold ounces sold for the year of 195,304 ounces were 17% below that of the prior year primarily due to the lower production base. Copper production in the fourth quarter of 1.3 million pounds was 12% higher than that of the same period in 2012 driven by improved copper grades in Q4 2013. For the full year, copper production of 4.9 million pounds was 20% lower than the prior year's production of 6.1 million in line with reduced throughput and grades. At Bulyanhulu we are in the process of completing the review of the life of mine using a US$1,300 gold price to calculate our reserves as well as assessing the most appropriate long-term mining methods. Although the impact of this is likely to see a reduction in the reserves, Bulyanhulu remains a long life, high grade asset, as demonstrated by the recently released exploration results, and we are confident it will deliver an increasing production profile at lower costs than at present. Buzwagi Three months ended Twelve months ended 31 December 31 December
(Unaudited) 2013 2012 2013 2012
Tonnes mined Kt 7,244 7,907 32,177 28,563
Ore tonnes mined Kt 1,250 1,325 3,753 4,233
Ore milled Kt 945 1,062 4,400 3,715
Head grade g/t 1.9 2.1 1.5 1.6
Mill recovery % 88.8% 90.9% 88.2% 87.3%
Ounces produced oz 51,830 64,828 181,984 165,770
Ounces sold oz 50,382 51,264 187,348 155,322
Copper production `000lbs 2,200 3,059 7,115 6,773
Copper sold `000lbs 1,706 1,945 7,062 5,628
Gold production at Buzwagi for the quarter was 51,830 ounces, up 17% on Q3 2013, but 20% lower than the prior year period. This was mainly a result of a 10% decrease in grade against Q4 2012 when mining focused on higher grade areas. The process plant continues to operate at its nameplate capacity of 12,000 tonnes per day, although due to predominantly planned plant downtime for maintenance purposes, throughput for the quarter of 0.9 million tonnes was 11% lower than in Q4 2012.
Gold sold during the quarter amounted to 50,382 ounces, broadly in line with production.
Gold production for the full year of 181,984 ounces was 10% higher than the prior year driven by increased throughput as a result of improved plant reliability as it operated at nameplate capacity during 2013. Gold sold for the year amounted to 187,348 ounces, 21% above that of the prior year period due to the increased production base and the sale of concentrate on hand from Q4 2012.
Copper production in the fourth quarter of 2.2 million pounds was 28% lower than that of the same period in 2012 driven by lower copper grades. For the full year, copper production of 7.1 million pounds was 5% higher than in 2012 driven by the increased throughput, slightly offset by lower copper grades.
North Mara Three months ended Twelve months ended
31 December 31 December
(Unaudited) 2013 2012 2013 2012
Tonnes mined Kt 4,104 5,788 21,027 18,391
Ore tonnes mined Kt 678 694 2,601 1,711
Ore milled Kt 643 740 2,643 2,786
Head grade g/t 3.4 3.0 3.5 2.5
Mill recovery % 86.0% 88.7% 86.8% 85.4%
Ounces produced oz 60,358 63,235 256,732 193,231
Ounces sold oz 61,050 56,800 260,945 186,600
Gold production for the quarter at North Mara of 60,358 ounces was 5% below that of the prior year period. A 13% increase in grade due to increased mine grade received from the Gokona pit compared to Q4 2012, as we continue to see positive variations from the grade control model being used, was more than offset by the impact on throughput of a planned 10 day maintenance shutdown in December together with marginally lower recoveries Gold sold for the quarter was 61,050 ounces, broadly in line with production. Production for the full year of 256,732 ounces was 33% higher than that of the prior year. Head grade and mill recovery were positively impacted by an increase in ore tonnes mined and grade, predominantly driven by mining from the Gokona pit. Gold ounces sold for the full year of 260,945 ounces were 2% higher than production due to the sale of ounces on hand from Q4 2012, and 40% higher than that of 2012 due to the increased production base. As announced as part of the third quarter results, we have deferred mining of Gokona Cut 3 at North Mara while we finalise the feasibility study into alternatives of mining this reserve. This deferral will be taken into account, together with our revised reserve base, in our year-end review of the carrying value of the asset. We have completed all the conditions required for the lifting of the Environmental Protection Order at North Mara and have received a formal discharge permit from the Lake Victoria Water Board. The removal of the EPO allows ABG to discharge clean water once it has been treated in the water treatment plant at the mine. Non-IFRS financial 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 social development costs. 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 cost per ounce sold are calculated by dividing the aggregate of these costs by gold ounces sold. Cash costs and cash cost per ounce sold are calculated on a consistent basis for the periods presented.
All-in sustaining cost per ounce sold (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. 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.
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 include 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 -0- Jan/21/2014 07:00 GMT