Acacia Mining plc Bank of America Merrill Lynch Global Metals and - - PowerPoint PPT Presentation

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Acacia Mining plc Bank of America Merrill Lynch Global Metals and Mining Conference May 2017 Important Notice This presentation includes forward - looking statements that express or imply Although Acacias management believes that the


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Acacia Mining plc

Bank of America Merrill Lynch Global Metals and Mining Conference May 2017

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SLIDE 2

Important Notice

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

  • ther factors, many of which are beyond the control of Acacia, which could cause

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

  • f gold or certain other commodity prices (such as copper and diesel), currency

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 2016 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

  • estimates. No assurances whatsoever can be given that the indicated quantities of

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

  • r in part, by any medium or in any form, in breach of any applicable securities
  • laws. BY ACCEPTING THIS PRESENTATION, YOU ACKNOWLEDGE AND

AGREE TO THE CONTENTS OF THIS DISCLAIMER AND YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS.

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference 2

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SLIDE 3

Company Overview

A leading African asset portfolio with a high-grade R&R of 27.5Moz

Our Assets Business Overview North Mara

  • High-grade open pit / UG mine
  • At least 10 year mine life

Bulyanhulu

  • High grade U/G mine nearing

geological potential

  • At least 18 year mine life

Buzwagi

  • Low-grade open pit which

completes mining at end of 2017

  • Will process stockpiles until 2020

Exploration

  • Maiden high-grade resource

declared in West Kenya

  • Built a pan-African portfolio

Producing mines Exploration properties Kenieba Belt JVs Mali West Kenya Project Kenya Bulyanhulu Tanzania Houndé Belt JVs Burkina Faso North Mara Tanzania Buzwagi Tanzania

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Nyanzaga Project Tanzania

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference

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SLIDE 4

Our Operating Philosophy

  • We run de-centralised operations and outsource any function where we can’t

be a world leader

  • Four areas we will never outsource:

 Technical prowess  Discovery  Leadership  Government and Community relationship

  • Capital allocation is centralised and led by the CEO

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference 4

  • Operational focus on creating sustainable free cash flow

Creating a sustainable competitive advantage based on core competencies

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SLIDE 5

We have transformed our business

At this stage, despite current concentrate ban, we continue to expect further production and AISC improvement in 2017

5 May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference

1,561 1,346 1,105 1,112 958 880-920 626 642 719 732 830 850-900 600 650 700 750 800 850 900

300 600 900 1,200 1,500 1,800

2012 2013 2014 2015 2016 2017E Production (koz) AISC (US$/oz)

AISC Progression vs Production

AISC Gold production (1) 2017 chart represents mid-point of guidance range

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SLIDE 6

Q1 2017 Performance

  • Gold production of 220koz, 15% higher

than Q1 2016

 Gold sales were 35koz lower than production  Primarily as a result of the Tanzanian

Government’s directive stopping the export of metallic mineral concentrate

  • AISC was below previous quarter at

US$934/oz

  • EBITDA of US$82 million, 25% higher

than Q1 2016

  • Due to sales lagging production and

indirect tax outflows net cash decreased to US$196 million

Continuing strong operational performance, financials impacted by ban

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference 6

959 926 998 958 934 938 854 901 921 878 200 400 600 800 1,000 1,200 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 $ / ounce

All In Sustaining Cost per Ounce

AISC AISC ex RSU

37 43 40 42 60 78 79 53 80 63 75 100 113 91 97 50 100 150 200 250 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Production (koz)

Production

Buzwagi Bulyanhulu North Mara

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North Mara – Tanzania

  • High-grade open pit and underground

mine comprising two deposits:

 Gokona – transitioned open pit to underground

  • perations in mid 2015

 Nyabirama - open pit with U/G potential

  • Record year in 2016 driven by ramp up of

U/G

 Guiding for 2017 production to be up to 10%

lower than 2016 with AISC up to 10% higher

  • Extensive drill programmes underway to

prove up at least a 10 year life at +300koz per annum

A leading asset in Africa, driving free cash flow

7 May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference

659 623 590 410 1,227 947 915 733 200 400 600 800 1,000 1,200 1,400 1,600 2013 2014 2015 2016 2017E $ / ounce

All In Sustaining Cost per Ounce

Cash Cost Sustaining Capital Capitalised Development Other

257 274 287 378 3.48 3.48 3.57 4.52 – 1 2 3 4 5 6 7 100 200 300 400 2013 2014 2015 2016 2017E Grade (g/t) Production (koz)

Production & Head Grade

Production (OP) Production (UG) Head Grade

Implied 2017 guidance Implied 2017 guidance

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SLIDE 8

Extensive Brownfields Opportunities

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Gokona Nyabirama

Targeting resource extensions

Targeting reserves to support at least a 10 year life at greater than 300koz per annum

  • Significant drill programmes underway over the next two years

 Initial results under Gokona include 19.4m @ 64.7g/t and 9.0m @ 59.9g/t

  • Already extended high grade structures beneath Nyabirama to a vertical depth of

approximately 950m

 Targeting transition to U/G on completion of the open pit in 2021

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SLIDE 9

Bulyanhulu - Tanzania

  • High grade narrow vein deposit

 Geological endowment of over 20 million ounces*

  • History of under-delivery and lack of free

cash generation

  • Undertaken re-engineering of the mine to

ensure delivers to its geologic potential

 2016 was the highest production since 2006 as

mine starts to deliver on potential

 AISC has fallen significantly as changes to mine

take effect

  • Ramping production to +300kozpa over the

coming years

  • Continuing to operate normally and

stockpiling concentrate production

 Represents ~45% of mine production

Continuing the transformation

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* Including produced ounces

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference

198 222 240 255 – 12 34 35 198 235 274 289 7.80 8.70 8.58 9.28 4.0 6.0 8.0 10.0 12.0 14.0 50 100 150 200 250 300 350 2013 2014 2015 2016 2017E Grade (g/t) Production (koz)

Production & Head Grade

Production (UG) Production (Tails) Head Grade (ROM)

889 812 797 722 1,344 1,266 1,253 1,058 200 400 600 800 1,000 1,200 1,400 1,600 2013 2014 2015 2016 2017E $ / ounce

All In Sustaining Cost per Ounce

Cash Cost Sustaining Capital Capitalised Development Other

Implied 2017 guidance Implied 2017 guidance

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SLIDE 10

Buzwagi - Tanzania

Set up to deliver additional cash flow from re-sequencing open pit

  • Bulk tonnage open pit mine
  • Q1 17 production of 60koz , 62% higher

than Q1 2016, at an AISC of US$773/oz

 Driven by a 64% increase in head grade

  • Extended mining by six months until the

end of 2017

  • Will process stockpiles until 2020

 Adds 150koz of production over the LOM

  • Expect a 40% increase in production and

up to 30% reduction in AISC in 2017

  • Continuing to operate normally and

stockpiling concentrate production

 Represents ~55% of mine production

10 May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference

945 791 1,046 1,031

1,507 1,055 1,187 1,095 – 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2013 2014 2015 2016 2017E $/ounce

All In Sustaining Cost per Ounce

Cash Cost Sustaining Capital Capitalised Development Other

182 210 171 162 1.46 1.73 1.39 1.21

0.6 0.8 1.0 1.2 1.4 1.6 1.8

  • 50

100 150 200 250 300 2013 2014 2015 2016 2017E Grade (g/t) Production (koz)

Production & Head Grade

Production (OP) Production (UG) Head Grade

Implied 2017 guidance Implied 2017 guidance

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Major contributor to host economies

Tanzania continues to received increased benefits from our operations

  • Over time we have agreed to follow a number of the 2010 Mining Code regulations

 Despite the terms of the stabilisation agreements signed with the Government  Contributes to the Tanzanian Government’s aim of self-funding the national budget

  • The voluntary concessions include:

 Local service levies at each mine increased from US$200k to 0.3% of revenues (~US$1mpa per mine)  Increasing royalty payments to 4% in 2012, which has increased the royalty paid to the Government

by US$50 million in last 4 years

  • Led to total local tax contribution of US$164 million in 2016

 Incurred a corporate tax charge amounting to US$55 million  Royalties of US$47 million  Payroll taxes of US$40 million  Other taxes of approximately US$22 million

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference 11

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SLIDE 12

Metallic Mineral Concentrate Ban

  • In March 2017, the Ministry of Energy and Minerals announced a ban on the export of

metallic mineral concentrates

 In order to promote the creation of a domestic smelting industry

  • Impacts approximately 45% of Bulyanhulu’s revenues and 55% of Buzwagi’s revenues

 North Mara is not impacted as it only produces doré

  • Continuing to engage with Government to achieve a resolution

 Operating Bulyanhulu and Buzwagi as normal and stockpiling concentrate at each of the sites  Taken a range of actions to help manage the significant financial impact of the deferral of sales

  • During Q1 this negatively impacted cashflow by US$33 million due to loss of sales
  • Will re-assess the operational plans of the two mines if we cannot reach a resolution in

the coming weeks

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference 12

Impacting approximately 30% of group revenues

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SLIDE 13

Local listing requirements

  • Focus from the Government to increase transparency of business in Tanzania

 Enacting regulation on a sector by sector basis, to make companies list on the local stock exchange  First sector to be impacted was Telecommunications followed by mining

  • Mining regulations impose two main obligations

 30% local shareholding obligation through listing on the local stock exchange  Obligation for each of the entities that own Bulyanhulu, Buzwagi and North Mara to individually list  Deadline for listing is 23 August 2017

  • Acacia Mining plc cross-listed on the DSE in 2011, to promote Tanzanian ownership
  • Engaging with the relevant authorities in Tanzania

 To find a route forward that is both beneficial and practical for all stakeholders

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference 13

Sector wide legislation to promote local ownership

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Investing in Our Future

  • Systematically created a pan-African

greenfield exploration footprint

  • Exploration pipeline with over 60 targets
  • 12 rigs drilling greenfields projects across

the portfolio

 135,000 metres drilled in 2016  190,000 metres budgeted for 2017

  • 2017 greenfield budget increased by 15% to

US$25m

  • Key projects for 2017:

 West Kenya  Houndé Belt  North Mara (Gokona UG & Nyabirama UG)

We believe in exploration as a key driver of value and our approach is beginning to deliver results

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Brownfield projects Greenfield projects Kenieba JVs Mali West Kenya Project Kenya Houndé Belt JVs Burkina Faso Bulyanhulu Tanzania Nyanzaga Project Tanzania North Mara Tanzania

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference

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SLIDE 15

West Kenya Project

May 2017

Broad initial exploration programmes focused on identifying potential new deposits within ~1,600sqkm land package

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  • Acquired project in 2012
  • Extensive first pass exploration

across land package undertaken

 Over 37,000 soil samples  60km of reconnaissance drilling  80km of RC/DD prospect drilling

  • Geological review identified a

series of corridors across land package

  • Identified high grade shoots in

Liranda Corridor in 2015

 Delineated high grade Acacia &

Bushiangala shoots

  • Increased ownership in

primary licences to 100% for US$5m in 2016 Imaged soil geochemistry and prospect map

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Maiden Resource on Liranda Corridor

One of the highest grade projects in Africa

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  • Declared NI43-101 compliant Inferred Resource 1.31 million
  • unces of gold at 12.1 grams per tonne

 All of the resource is located on the Acacia prospect (one of five prospects

  • n the Liranda Corridor) which remains open laterally and at depth
  • Mineralisation associated with shear zones averaging 3 metres

wide, dependent on the zone, hosted by a mafic volcanic sequence

 Strike lengths vary between 200m and 600m  Resource is currently defined down to a vertical depth of 750m

  • Near term upside from Bushiangala prospect
  • First step in the delineation of a multi-million ounce high-grade

corridor

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference

Tonnes Grade (Au g/t) Ounces Inferred Resource1 3,461,000 12.1 1,305,700

1 The Mineral Resource has been estimated by Ms C Pitman, P.Geo.(Ontario) of AdiuvareGE. in

conformity with the CIM Mineral Resources and Mineral Reserves Estimation Best Practice Guidelines (CIM, 2003) and are classified according to the CIM Standard Definition for Mineral Resources and Mineral Reserves (CIM, 2014).

Visible Gold in diamond core from hole LRCDD0093

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Liranda Corridor – New targets evolving

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference 17

Potential for a multi-million ounce gold camp emerging

Bushiangala Acacia Shigokho-Shibunane

1km

Focus of 2016 drilling

Primary focus of 2017 drilling Potential further upside being tested in 2017

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Investment Case

  • Continue to expect a fifth consecutive year of increased production

 Will represent a 40%(1) uplift from 2012

  • Further reduction in costs across the business

 AISC will have fallen by US$775(1) per ounce since Q4 2012

  • Portfolio of assets set up to deliver free cash flow with a strong balance sheet to

withstand impact of concentrate ban

 Net cash position of US$196 million

  • Delivering success through the drill bit across Africa

 West Kenya Project on the cusp of delivering high grade resource ounces

  • Engaging with Government to build long-term partnership that provides mutual

success and stakeholder value

Focused on long term value creation for all of our stakeholders

(1) Mid point of 2017 guidance ranges

May 2017 Bank of America Merrill Lynch Global Metals and Mining Conference 18