Acacia Mining plc
2014 Preliminary Results Presentation February 2015
LSE:ACA
Acacia Mining plc 2014 Preliminary Results Presentation February - - PowerPoint PPT Presentation
LSE:ACA Acacia Mining plc 2014 Preliminary Results Presentation February 2015 Important Notice This presentation includes forward - looking statements that express or imply Although Acacias management believes that the expectations
LSE:ACA
This presentation includes “forward-looking statements” that express or imply expectations of future events or results as opposed to historical facts. These statements include, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future production, operations, costs, projects, and statements regarding future performance. Forward-looking statements are generally identified by the words “plans,” “expects,” “anticipates,” “believes,” “intends,” “estimates” and other similar expressions. All forward-looking statements involve a number of risks, uncertainties and
actual results and developments to differ materially from those expressed in, or implied by, the forward-looking statements contained herein. Factors that could cause or contribute to differences between the actual results, performance and achievements of Acacia include, but are not limited to, changes or developments in political, economic or business conditions or national or local legislation or regulation in countries in which Acacia conducts - or may in the future conduct - business, industry trends, competition, fluctuations in the spot and forward price
fluctuations (including the US dollar, South African rand, Kenyan shilling and Tanzanian shilling exchange rates), Acacia’s ability to successfully integrate acquisitions, Acacia’s ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves, and to process its mineral reserves successfully and in a timely manner, Acacia’s ability to complete land acquisitions required to support its mining activities, operational or technical difficulties which may occur in the context of mining activities, delays and technical challenges associated with the completion of projects, risk of trespass, theft and vandalism, changes in Acacia’s business strategy and ongoing implementation of operational reviews, as well as risks and hazards associated with the business of mineral exploration, development, mining and production and risks and factors affecting the gold mining industry in general. Although Acacia’s management believes that the expectations reflected in such forward-looking statements are reasonable, Acacia cannot give assurances that such statements will prove to be correct. Accordingly, investors should not place reliance on forward-looking statements contained in this presentation. Any forward-looking statements in this presentation only reflect information available at the time of preparation. Subject to the requirements of the Disclosure and Transparency Rules and the Listing Rules or applicable law, Acacia explicitly disclaims any obligation or undertaking publicly to update or revise any forward- looking statements in this presentation, whether as a result of new information, future events or otherwise. Nothing in this presentation should be construed as a profit forecast or estimate and no statement made should be interpreted to mean that Acacia’s profits or earnings per share for any future period will necessarily match or exceed its historical published profits or earnings per share. Mineral reserves and mineral resources estimates contained in this presentation have been calculated as at 31 December 2014 in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities. Canadian Institute of Mining, Metallurgy and Petroleum (CIM) definitions were followed for mineral reserves and resources. The reserves and resources figures stated are
metal will be produced and totals stated may not add up due to rounding. You are reminded that you have received this presentation on the basis that you are a person to whom this presentation may be lawfully made and delivered. You may not and are not authorised to: (i) reproduce or publish this presentation; or (ii) distribute, disclose or pass on this presentation to any other person, in whole
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2 February 2015 2014 Preliminary Results Presentation
February 2015 2014 Preliminary Results Presentation 4
A leading asset portfolio in Africa
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Focused on free cash flow
2
Growing our footprint
5
Disciplined capital allocation
3
Becoming the partner of choice
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Our Three Pillars
… unearthing Africa’s potential
Our People Our Business Our Relationships
February 2015 2014 Preliminary Results Presentation 5
Consistently improving performance
Increasing production
2014
stream
forward
exploration success Financial discipline Efficient Delivery
reduction in costs
reduction in quarterly AISC
Operational Review savings
programme
cash position
residual liability
7
A watershed year for Acacia
Generated over US$100m of free cash, pre growth, dividends and Tulawaka disposal
2.3Moz of resources added at Bulyanhulu as a result of drilling
2014 Preliminary Results Presentation February 2015
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200 400 600 800 1,000 1,200 1,400 1,600 1,800 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 FY 12 FY 13 FY 14
US$/ounce
Quarterly AISC and Cash Cost Evolution (US$/oz)
Cash cost / ounce AISC / ounce
February 2015 2014 Preliminary Results Presentation
Investing for growth, while increasing production and reducing costs
626 642 719 750-800 500 550 600 650 700 750 800 2012 2013 2014 2015E
Production (koz)
171 112 61 95 113 171 132 130 47 117 61 5 100 200 300 400 2012 2013 2014 2015E
Capital Expenditure (US$ Million)1
Expansion Cap Dev't Sustaining 9
EUS/$ million
2014 Preliminary Results Presentation February 2015
1,561 1,346 1,105 1,050- 1,100 500 700 900 1,100 1,300 1,500 2012 2013 2014 2015E
AISC per ounce sold (US$/oz)
941 827 732 695-725 500 600 700 800 900 2012 2013 2014 2015E
Cash cost per ounce sold (US$/oz)
1 Sustaining capital guidance includes US$15 million of land purchases which is not included in historic numbers as treated as a pre-payment for accounting
purposes
1 Non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ”Non IFRS measures”’ on page 24 of preliminary results for definitions. 2 Cash cost per tonne milled excluding the reprocessing of tailings at Bulyanhulu amounted to US$69 per tonne for the quarter and US$65 for the year ended 31 December 2014.
February 2015 2014 Preliminary Results Presentation 11
Operational Performance 2014 2013 % change Tonnes mined (thousands of tonnes) 41,684 54,076 (23)% Ore tonnes mined (thousands of tonnes) 8,170 7,225 13% Ore tonnes processed (thousands of tonnes) 8,413 7,914 6% Process recovery rate (percent) 88.0% 88.4% 0% Head grade (grams per tonne) 3.0 2.8 7% Gold production (ounces) 718,651 637,002 13% Gold sold (ounces)1 703,680 643,597 9% Cash cost per tonne milled1,2 (US$) 61 66 (8)% Per ounce data (US$) Average spot gold price1 1,266 1,411 (10)% Average realised gold price1 1,258 1,379 (9)% Total cash cost1 732 812 (10)% All-in sustaining cost1 1,105 1,346 (18)%
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14 2014 Preliminary Results Presentation February 2015
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1 Non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ”Non IFRS measures”’ on page 24 of preliminary results for definitions.
2 Excludes non-cash reclamation asset adjustments and includes finance lease purchases.
.
February 2015 2014 Preliminary Results Presentation 17
Financial Performance 2014 2013 % change Revenue US$m 930,248 929,004
US$m 252,716 240,407 5% Tax (expense) / credit US$m (25,977) 187,959 nm Net earnings / (loss) US$m 90,402 (781,101) nm Basic earnings / (loss) per share (EPS) US cents 22.1 (190.4) nm Dividend per share (cents) US$m 4.2 3.0 40% Cash and cash equivalents US$m 293,850 282,409 4% Cash generated from operating activities US$m 289,528 187,115 55% Operating cash flow per share1 US cents 70.6 45.6 55% Capital expenditure2 US$m 253,802 385,068 (34)% Long term debt (Borrowings) US$m 142,000 142,000
1,10 0 to 1,175
February 2015 2014 Preliminary Results Presentation 18
North Mara and Buzwagi drove cash generation in 2014
282 117 20 57 14 14 294 235 255 275 295 315 335 355 375 395 415 435 Cash at Dec 2013 Cashflow from sustaining
Exploration Expansion Capex Dividends Net Tulawaka cashflow Cash at Dec 2014 US$ millions
Cash flow Bridge
1,10 0 to 1,175
February 2015 2014 Preliminary Results Presentation 19
Third year in a row of lower AISC
1,561 1,346 80 75 78 5 1,105
1,000 1,100 1,200 1,300 1,400 1,500 1,600 2012 AISC 2013 AISC Cash costs Sustaining Capital Capitalised Strip Other 2014 AISC US$/oz
All-in Sustaining Cost Bridge (US$/oz)
Continuing to enforce strict financial discipline
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400 600 800
200 300 400 500 600 700 800 2012 2013 2014 Koz US$ million
Direct Mining Costs Pre-capitalisation
Labour Energy Consumables Maintenance Contracts G&A Production
294 176 96
50 100 150 200 250 300 350 2012 2013 2014 US$/oz
Sustaining Capex per ounce
adding 124koz of production
capex per ounce into line with industry averages
February 2015 2014 Preliminary Results Presentation 21
Operational Optimisation
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EBITDA and Earnings affected by significant non-cash items
share
Other Charges (US$m) 2014 2013 Operational Review costs (including restructuring cost) 13,689 13,305 Unrealised non-hedge derivative losses (non cash)1 13,621 7,203 Foreign exchange losses/ (gains) (non cash) 13,516 (3,622) Legal costs 6,710 3,138 Other 385 10,400 Total 47,921 30,424
1 As at 31 Dec 2014, open oil hedge position for oil for 2015 amounted to 326,000 barrels at an average price of $97 - $110 per barrel, and for 2016 250,000 barrels at
an average price of $75 - $95 per barrel.
February 2015 2014 Preliminary Results Presentation 22
metric to a cash flow based metric in July
Payout range remained the same at 15-30%
cents per share, equating to a full year dividend of 4.2 cents
Increase of 40% on 2013
Represents 19% of net cash flow, above bottom of range
previous earnings based metric
Prioritising shareholder returns
Dividend Calculation US$m Cash added to balance sheet 11.4 Add back: Growth Capital 61.2 Add back: Cash Finance expenses 6.4 Add back: Dividends 13.9 Net Cash Flow 93.0 Payout Range 15-30% Proposed Full Year Dividend 17.2 Proposed Full Year payout ratio 19%
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…Moving to the 1st Quartile
2014 Preliminary Results Presentation February 2015
$1,000 $1,500 $2,000 $2,500 $3,000
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
US$/oz Aggregate Mine Production
Global All-in Sustaining Cost Curve
ACA Q4/14 ABG Q3/12
5 year LOM Ave
* Source: Macquarie Research / GFMS 2015E Estimate AISC curve
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Business now set up to deliver free cash flow with significant improvements still to come
2014 Preliminary Results Presentation February 2015
…A fresh approach to mining
Bulyanhulu* North Mara Buzwagi Group** Q4 2014 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Q4 2013 Q4 2014 Q4 2013 Key operational information: Ounces produced
66,033 53,186 70,655 60,358 44,398 51,830 181,084 165,375 Ounces sold
63,166 56,735 75,760 61,050 55,316 50,382 194,243 168,167 Cash cost per ounce sold US$/oz 772 776 668 636 818 941 744 774 AISC per ounce sold US$/oz 1,225 1,118 912 1,075 990 1,300 1,088 1,163 Copper production Klbs 1,370 1,348
2,200 3,107 3,548 Copper sold Klbs 1,425 1,304
1,706 3,815 3,010 Mining information: Tonnes mined Kt
4,104 6,878 7,244 10,776 11,570 Ore tonnes mined / hoisted Kt 245 222 788 678 1,248 1,250 2,281 2,151 Processing information: Ore milled Kt 245 229 718 643 1,052 945 2,405 1,817 Head grade g/t 9.0 7.9 3.5 3.4 1.4 1.9 85.5% 88.5% Mill recovery % 83.8% 91.2% 86.9% 86.0% 94.2% 88.8% 2.7 3.2 Cash cost per tonne milled US$/t 199 193 70 60 43 50 60 72
2014 Preliminary Results Presentation 27 February 2015 * Bulyanhulu mining and processing information represent ROM only – Tailings reprocessing statistics are as follows: Q414 – Ore Milled 390Kt @ 1.0g/t, recoveries of 59.4% for 7,035 ounces recovered. Q4 13 No activity ** Group figures for ore milled, head grade and mill recovery include reclaimed tailings in processing information
Bulyanhulu* North Mara Buzwagi Group** FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 Key operational information: Ounces produced
234,786 198,286 273,803 256,732 210,063 181,984 718,651 637,002 Ounces sold
215,740 195,304 274,540 260,945 213,399 187,348 703,680 643,597 Cash cost per ounce sold US$/oz 812 890 623 659 791 945 732 812 AISC per ounce sold US$/oz 1,266 1,344 947 1,227 1,055 1,506 1,105 1,346 Copper production Klbs 5,289 4,855
7,115 14,068 11,970 Copper sold Klbs 4,925 4,508
7,062 13,448 11,570 Mining information: Tonnes mined Kt
21,027 24,510 32,177 41,684 54,076 Ore tonnes mined / hoisted Kt 909 872 2,569 2,601 4,692 3,753 8,170 7,225 Processing information: Ore milled Kt 906 871 2,804 2,643 4,086 4,400 8,413 7,914 Head grade g/t 8.7 7.8 3.5 3.5 1.7 1.5 3.0 2.8 Mill recovery % 88.0% 90.9% 87.2% 86.8% 92.4% 88.2% 88.0% 88.4% Cash cost per tonne milled US$/t 193 200 61 65 41 40 61 66
2014 Preliminary Results Presentation 28 February 2015 * Bulyanhulu mining and processing information represent ROM only – Tailings reprocessing statistics are as follows: FY14 – Ore Milled 617Kt @ 1.1g/t, recoveries of 56.9% for 12,405 ounces recovered. FY13 No activity ** Group figures include reclaimed tailings in processing information
year life of mine with AISC below US$750/oz
improved community relationships
Gokona pit
million (including exploration decline)
Potential to lower costs by contracting
equipment
required permits to commence mining underground
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Moving into construction phase
Proven Probable Proven and Probable
Kt Grade (g/t) Koz Kt Grade (g/t) Koz Kt Grade (g/t) Koz
Gokona U/G
95.4 5.88 18 1,894 8.18 498 1,989 8.06 516
Preliminary Results Presentation February 2015
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Reef 1 Reef 2
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Targeting new near surface ounces providing greater flexibility
multiple sub-parallel gold zones
production centres within 5km
2014 Preliminary Results Presentation February 2015
well endowed Archean greenstone belts
>1,000km² of regional mapping >30,000 soil samples collected >50 gold-in-soil anomalies for
follow-up programmes
>1,150 AC holes Ground geophysics (IP)
delineated in several locations
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2,200 km2 across highly-prospective greenstone belt
2014 Preliminary Results Presentation February 2015
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with over 87 holes returning intercepts of over 0.5 g/t; best results included:
6m @ 22.3 g/t 12m @ 12.6 g/t 6m @ 30.9 g/t 3m @ 15.2 g/t
delineated
drilling commenced during Q4
High grade results within 12km under-explored corridor
2014 Preliminary Results Presentation February 2015
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Multiple structural domains with 50km of surface gold anomalies
as a significant gold belt
Resources on the South Houndé Project
Project
geology
already delineated
2014 Preliminary Results Presentation February 2015
Reserves and Resources estimates calculated in accordance with NI43-101 – 2013 Reserves calculated at US$1,300/oz and Resources at US$1,500/oz February 2015 2014 Preliminary Results Presentation 37
2014 YE 2013 YE Tonnes (000's) Grade Au (g/t) Ounce (000's) Tonnes (000's) Grade Au (g/t) Ounce (000's) Bulyanhulu Proven and probable (U/G) 29,681 9.667 9,225 29,610 9.530 9,072 Proven and probable (Tailings) 9,082 1.046 305 7,974 1.229 315 Mineral Resource (U/G) 12,399 8.491 3,385 10,225 10.653 3,502 Inferred (U/G) 13,725 9.897 4,367 6,632 12.877 2,745 Buzwagi Proven and probable 20,762 1.345 898 24,105 1.445 1,120 Mineral Resource 48,333 1.298 2,017 49,109 1.291 2,038 Inferred 4,623 1.237 184 7,173 1.183 273 North Mara Proven and probable 23,653 2.692 2,047 21,710 3.169 2,212 Mineral Resource 17,960 2.873 1,659 25,266 3.316 2,694 Inferred 10,073 3.236 1,048 735 2.730 65 Exploration Proven and probable
105,296 1.422 4,812 105,296 1.422 4,812 Inferred 4,456 1.352 194 4,456 1.352 194 Total* Proven and probable 83,178 4.665 14,475 83,399 4.743 12,719 Mineral Resource 183,988 2.007 11,873 189,895 2.137 13,046 Inferred 32,877 5.481 5,793 18,995 5.365 3,276