Acacia Mining plc 2018 Interim Results Presentation July 2018 - - PowerPoint PPT Presentation

Acacia Mining plc

2018 Interim Results Presentation July 2018

LSE:ACA

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 on-going 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. Save as required under the Market Abuse Regulation or otherwise as may be required under 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. Any 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 estimates. Any reserves and resources figures stated in this presentation are estimates only. All estimates stated are subject to a variety of unknown factors, risks and considerations, such that no assurances whatsoever can be given that any indicated quantities of metal will be produced. In addition, estimated figures and totals stated may not add up due to rounding. This presentation is provided for general information purposes only. It does not constitute an invitation or offer to underwrite, subscribe for or otherwise acquire

• r dispose of any securities of Acacia in any jurisdiction. 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 or 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.

July 2018 2018 Interim Results Presentation 2

H1 Review

Strong operational performance following stabilisation of the business

• H1 gold production of 255koz, on track for top of guidance range of 435-475koz

 Driven by outperformance at Buzwagi due to better grades and throughput

• All production in doré form

 H1 gold sales of 251koz in line with production  Q2 gold production of 134koz, 11% above Q1 2018

• H1 AISC of US$945/oz sold, 6% above H1 2017

 Tracking below mid-point of 2018 guidance range of US$935-985/oz  Q2 AISC of US$918/oz sold, 6% lower than Q1 2018

• Cash balance rose 49% during H1 2018 to US$120.1 million

 Generated US$14 million of free cash flow in Q2 18 due to strong operational performance  Received proceeds of US$45 million from sale of non-core royalty in Q1 2018

July 2018 2018 Interim Results Presentation 3

Update on Tanzania

Update on Operating Environment

Discussions between Barrick Gold Corporation and the Tanzanian Government continued during H1 2018

• Barrick and the Tanzanian Government continued their discussions aimed at agreeing

and documenting the details of the framework they announced in 2017

• On the 24 June 2018 Barrick announced that it would not be providing a timetable for

the completion of its discussions with the GoT

• Acacia has been providing support to Barrick in its discussions with the GoT, but has

not been directly involved in those discussions to date

• Any proposal received by Acacia in the future that might be agreed in principle

between Barrick and the GoT as a result of those discussions will be subject to review by the Independent Committee of the Acacia Board of Directors

• Acacia continues to engage with Barrick to seek to understand Barrick’s expectations

for the future conduct and a timetable for the completion of its discussions with the GoT

• International arbitration processes ongoing to protect the business

July 2018 2018 Interim Results Presentation 5

Major Contributor to Tanzania

Over 15 years Acacia has invested >US$4bn and paid >US$1bn in taxes

• In H1 2018 we paid US$67.1 million in taxes and

royalties in Tanzania

 Includes corporate taxes of US$23.3 million  Royalties of US$25.7 million  Payroll and other taxes of US$18.1 million

• Independent EY report on 2017 contribution

 Acacia contributed US$712 million to the national economy  Approximately 1.5% of Tanzania’s total GDP  Purchased US$434 million of goods and services from

suppliers located in Tanzania in 2017

• Acacia’s Sustainable Communities initiatives

contribute tangible benefits for local communities

 Upgraded the Nyamwaga Health Centre North Mara at a

cost of over US$600,000 to serve 350,000 people

 Support the Rafiki Mission - a volunteer surgical

programme that in April 2018 treated 60 patients at Sekou Toure Hospital in Mwanza.

July 2018 2018 Interim Results Presentation 6

Presenting Our Economic Contribution

7

Exhibited social investment projects during parliament session in Dodoma to Ministers, MPs and the Mining Commission

To To

Run off and leachate 2018 Interim Results Presentation July 2018

Operations Review

North Mara – Q2 Review

Delivering in line with expectations

July 2018 2018 Interim Results Presentation 9

• Regrettably, Sadock Crispin Tindahinile, an
• perator for one of our contractors passed

away as a result of an accident at the Gokona deposit in Q2. Investigation completed

 TRIFR of 0.21

• Produced 86koz, 3% higher than Q2 2017

 Driven by marginally higher head grades

compared to Q2 2017

• AISC of US$861/oz

 14% higher than in Q2 2017, as a result of higher

cash costs

• On track for production to be in line with

2017 with AISC approximately 5% higher

• Targeting building the reserve base to

sustain production above 300koz for next 10 years

 Continuing to invest in expansionary drilling

programmes at Gokona

 Pre-feasibility study underway at Nyabirama U/G

96 83 72 72 77 86 4.6 4.0 3.4 3.5 3.7 4.1

• ,1.0

,2.0 ,3.0 ,4.0 ,5.0 ,6.0 ,7.0 20 40 60 80 100 120 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Grade (g/t) Production (koz)

Production & Head Grade

Production (OP) Production (UG) Head Grade 410 476 550 587 607 570 717 758 864 903 950 861 200 400 600 800 1,000 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 $ / ounce

All In Sustaining Cost per Ounce

Cash Cost Sustaining Capital Capitalised Development Other

Unlocking the potential of North Mara

• A total of 21,071 metres of extension and infill drilling were completed during H1 2018

in the West and Central zones.

• Significant intercepts returned included:

 UGKD453 15.0m @ 13.2 g/t Au from 176m  UGKD457 7.0m @ 53.1 g/t Au from 193m; and

17.0m @ 6.3 g/t Au from 225m

 UGKD458 14.6m @ 8.1 g/t Au from 190m and

26.0m @ 4.1 g/t Au from 222m

 UGKD463 10.0m @ 7.7 g/t Au from 174m  UGKD472 10.0m @ 14.3 g/t Au from 174m  UGKD448 20.0m @ 8.7 g/t Au from 157m  UGKD476 14.0m @ 9.4g/t Au from 96m; and

10.0m @ 10.9g/t Au from 234m

 UGKD479 11.0m @ 3.2g/t from 359m

• Increased our confidence in being able to extend the resource going forward
• A further 25,000 metres of drilling in the Central and West zones planned for H2 2018

July 2018 2018 Interim Results Presentation 10

Continuing to extend high grade mineralisation in the Gokona Underground Central Zone

Focus of Drilling - Gokona Underground – Central Zone - 1040mRL

Bulyanhulu – Q2 Review

Tailings retreatment outperforming whilst U/G on reduced operations

July 2018 2018 Interim Results Presentation 11

• Improved safety performance with TRIFR of

0.00, compared to 0.73 in H1 2017

• Produced 10koz from reclaimed tailings, 18%

higher compared to Q2 2017

 Although 82% lower than Q2 2017’s total

production

• AISC of US$737/oz sold for Q2 2018

 Excludes ROP costs of US$8.4 million

• On track to deliver production of ~30koz at

AISC of US$1,000/oz from re-claimed tailings

• Optimisation study to assess best restart
• ption due for completion at year end

 Initial indications are that the reserve base could

fall as the mine focuses on higher grade and margin ounces

 Assuming resolution of concentrate ban, U/G

could see a phased restart in late 2019

AISC if sales = production

63 59 50 3 9 10 1.4 1.4 1.3 1.4 1.1 1.3 0.0 2.0 10 20 30 40 50 60 70 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Grade (g/t) Production (koz)

Production & Head Grade

Production (UG) Production (Tails) Head Grade (Tailings)

786 813 863 713 584 1,229 1,558 1,365 923 737 200 400 600 800 1,000 1,200 1,400 1,600 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 $ / ounce

All In Sustaining Cost per Ounce

Cash Cost Sustaining Capital Capitalised Development Other

Non-meaningful

Buzwagi – Q2 Review

Production solely from lower grade ore stockpiles

July 2018 2018 Interim Results Presentation 12

• Strong safety performance with no Lost

Time Injuries and a 0.00TRIFR

• Production of 37koz was ahead of

expectations

 44% lower than Q2 2017 due to source of ore feed

• AISC per ounce sold of US$1,025 was 35%

higher than Q2 2017

• Strong performance year to date, now expect

to exceed initial 2018 production guidance of ~100koz

 Mining final blocks of the open pit in Q3, impact

included in initial guidance

• AISC still expected to increase to

~US$1,100/oz, impacted by lower production and release of non-cash high cost inventory amounting to US$200/oz

60 66 69 74 36 37 1.8 1.9 2.2 2.4 1.3 1.0

0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6

• 10

20 30 40 50 60 70 80 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Grade (g/t) Production (koz)

Production & Head Grade

Production Head Grade 694 705 564 535 964 964 773 762 695 583 1,052 1,025 200 400 600 800 1,000 1,200 1,400 1,600 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 $ / ounce

All In Sustaining Cost per Ounce

Cash Cost Sustaining Capital Capitalised Development Other

Consolidated H1 2018 Performance

• 255koz of gold production achieved

 41% reduction against H1 2017 due to halting of

all underground mining at Bulyanhulu and transition to stockpile processing operation at Buzwagi

 H1 2018 gold sales of 251koz broadly in line with

production

• Continued strong cost performance, with

AISC of US$945/oz

 6% above H1 2018 but tracking below mid-point

• f FY 2018 guidance range

Continuing strong operational performance

July 2018 2018 Interim Results Presentation 13 800

80 82 126 143 73 175 204 180 144 163 157 132 123 53 19 50 100 150 200 250 300 350 400 450 H1 16 H2 16 H1 17 H2 17 H1 18 Production (koz)

Production

Buzwagi North Mara Bulyanhulu 1,133 1,112 941 958 893 875 945 200 400 600 800 1,000 1,200 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18 $ / ounce

All In Sustaining Cost per Ounce

Financial Review

Financial Highlights

1 These are non-IFRS measures 2 EBITDA, adjusted EBITDA, net (loss)/earnings, (loss)/earnings per share, adjusted net earnings, adjusted earnings per share and cash generated from operating activities include continuing and discontinued operations in 2014 3 Excludes non-cash capital adjustments (reclamation asset adjustments) and includes finance lease purchases and land purchases recognised as long term prepayments.

Financial Performance H1 2018 H1 2017 % change

Revenue US$m 333.4 391.6 (15)% EBITDA1 US$m 133.6 161.4 (17)% Adjusted EBITDA1,2 US$m 91.6 166.2 (45)% Net earnings/ (loss) 2 US$m 30.9 62.5 (51)% Basic earnings/ (loss) per share (EPS) (cents)2 US cents 7.5 15.3 (51)% Adjusted net earnings1,2 US$m 13.5 65.9 (80)% Adjusted earnings per share (AEPS) (cents)1,2 US cents 3.3 16.1 (80)% Cash and cash equivalents US$m 120.1 175.9 (32)% Working capital movement US$m (24.2) (159.7) nm Capital expenditure3 US$m 51.3 92.5 44.5% Net cash position US$m 63.3 90.7 (30)% Total borrowings US$m 56.8 85.2 (33)%

July 2018 2018 Interim Results Presentation 15

AISC Bridge

1,10 0 to 1,175

893 124 77 25 144 19 5 8 945 500 600 700 800 900 1,000 1,100 1,200

AISC H1 2017 Cash cost Sales ounce impact Share based payments Capitalised development Sustaining capital Corporate admin Other AISC H1 2018

US$ millions

AISC H1 2018 vs H1 2017

July 2018 2018 Interim Results Presentation 16

Return to positive cash flow generation

1,10 0 to 1,175

July 2018 2018 Interim Results Presentation 17

Discretionary spend / non-recurring spend 81 44 23 1 101 45 7 5 14 120 40 60 80 100 120 140 160

Cash at Dec 2017 Cash from ops, before w/c Corporate tax payments

• Invest. in

working capital Cash post Sust. Spend Proceeds sale of mineral royalty Exploration Expansion capital Borrowings repayment Cash at Jun 2018

US$ millions

Cash flow bridge

Indirect taxes partially refunded via offset

1,10 0 to 1,175

July 2018 2018 Interim Results Presentation 18

171 28 23 3 173 100 120 140 160 180 200 Total indirect tax receivable 31 December 2017 Indirect tax incurred Indirect tax refunded through offset Revaluation adjustments and write-offs Total indirect tax receivable 30 Jun 2018 US$ millions

Focused on reducing expenditure

• Optimisation of maintenance

programmes

 Starting to see benefit at North Mara

• Ongoing contract negotiations with key

suppliers

• Increasing proportion of forward price

agreements for mine supplies

• Continued disciplined capital allocation
• Corporate overhead reductions and

review of mine site G&A

• Optimisation of exploration spend to

focus on key projects

July 2018 2018 Interim Results Presentation 19

Multiple initiatives underway across the business

5% 6% 7% 8% 11% 11% 15% 15% 22%

Manageable Spend Distribution (%)

Corporate admin Purchased power Fuel cost Sust capital Personnel Maintenance Consumables Site admin Contractors

Discovery

A Pan African portfolio

Mali

• 5 permits across 191 sq km

Senegal Mali Shear Zone

• SMSZ host to 50+Moz
• Over 25 targets identified
• 2017 spend – US$1.7 million
• 2018 budget - US$1.6 million

Kenya

• 2,200 sq km land package
• First mover advantage
• Declared 1.2Moz @ 12.6g/t

Inferred Resource in 2017

• 2017 spend – US$12.0 million
• 2018 budget – US$6.4 million

Burkina Faso

• 4 JVs over 2,700 sq km
• Houndé Belt host to 10Moz+
• 2.1Moz @ 1.5 g/t inferred

resource on South Houndé JV

• +65 targets across portfolio
• 2017 spend – US$9.5 million
• 2018 budget – US$4.7 million

Continuing to invest in future discoveries

21

Tanzania

• Nyanzaga Project in joint

venture with OreCorp

• Announced conditional

agreement for OreCorp to move to 100% of the project for US$10m and a US$15m capped royalty

Proterozoic-Archean volcano-sedimentary belts

July 2018 2018 Interim Results Presentation

Outlook

• Expect FY 2018 production at top end of 435,000-475,000/oz range

 Follows strong operational performance achieved in H1 2018  All gold produced in 2018 will be in saleable doré form

• Expect FY 2018 AISC of between US$935 – US$985/oz

 Achieved H1 2018 AISC of US$945/oz, at lower end of previously guided range

• FY 2018 capital expenditure of approximately US$100 million

 H1 2018 capex of US$ 51 million primarily at North Mara and this focus to continue in H2 2018

• Continuing to invest in exploration success across Africa

 Expansionary drilling at Gokona Underground continuing in H2 2018  Progressing greenfield exploration projects

On track to deliver against unchanged guidance

July 2018 2018 Interim Results Presentation 23

Outlook

• Management team has stabilised the business over the last six months

 Assets continue to deliver despite the headwinds they face  On track to achieve top end of production guidance range for 2018

• Business returned to free cash flow generation for the first time since Q4 2016

 Net cash has increased from US$10 million to US$63 million year to date

• Priority remains on optimising performance with emphasis on strong cost discipline
• Successfully managing through the uncertainty in the operating environment

Strong operational performance following successful stabilisation of the business

July 2018 2018 Interim Results Presentation 24

Conclusion

Appendix

Operating Metrics Exploration & Development

Bulyanhulu* North Mara Buzwagi Group** H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 Key operational information: Ounces produced

• z

18,970 122,542 162,689 179,578 73,100 126,084 254,759 428,203 Ounces sold

• z

19,870 81,214 158,870 178,130 72,305 53,094 251,045 312,438 Cash cost per ounce sold US$/oz 646 795 588 441 964 697 701 577 AISC per ounce sold US$/oz 827 1,340 903 736 1,037 770 945 893 Copper production klbs

• 2,811
• 6,253
• 9,065

Underground: Ore tonnes trammed/hoisted kt

• 409

371 316

• 371

725 Open Pit: Tonnes mined kt

• 7,814

7,750

• 9,564

7,814 17,314 Ore Tonnes mined kt

• 1,308

1,536

• 4,951

1,308 6,487 Processing information: Ore milled kt 904 1,246 1,410 1,419 2,256 2,195 4,570 4,860 Head grade g/t 1.2 3.8 3.9 4.3 1.1 1.8 2.0 3.1 Mill recovery % 53.9% 79.9% 92.5% 92.5% 89.2% 96.7% 87.0% 89.6%

H1 2018 Operating Metrics

• Bulyanhulu mining and processing information represent ROM only – Tailings reprocessing statistics are as follows: H1 18– Ore Milled 0.9Mt @ 1.2g/t, recoveries of 53.9%

for 18,970 ounces recovered. H1 17– Ore Milled 0.8Mt @ 1.4g/t, recoveries of 47.2% for 17,946 ounces recovered

• ** Group figures for ore milled, head grade and mill recovery include reclaimed tailings in processing information, Group figures for ore mined exclude TSF material

July 2018 2018 Interim Results Presentation 26

Appendix

Operating Metrics Exploration & Development

West Kenya Project

Highly prospective 1,600 square kilometre license package

28

Licence area split into two main exploration camps: Kakamega Dome Camp

• Focus of majority of exploration to date
• Host to the high grade Liranda Corridor

Project

Lake Zone Camp

• Several high potential targets identified, some
• f them associated with colonial workings
• Encouraging grade intersected at Ramba

Lumba

July 2018 2018 Interim Results Presentation

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).

Kakamega Dome Camp - Liranda Corridor

Highly prospective land package of 1,600 square kilometres

29

• Discovery of an initial Inferred Resource of 1.3Moz at 12.1 g/t announced in February

2017

 Entire resource based on the Isulu Shoot

• Further drilling has been on-going since February 2017
• Drilling increased confidence but led to a marginal decrease in ounces to 1.2Moz @

12.6 g/t, announced in February 2018

 Brought in additional ounces from the Bushiangala deposit, along strike from Isulu

• Technical studies are under way as a first high level look at whether the prospect has

the potential to become economically viable

July 2018 2018 Interim Results Presentation

Tonnes Grade (Au g/t) Ounces Isulu Inferred Resource 2,500,000 12.9 1.004 Moz Bushiangala Inferred Resource 374,600 10.5 126,000

Lake Zone - Ramba Lumba Target

July 2018 2018 Interim Results Presentation 30

Potential high grade continuation of a colonial mine

• Ramba-Lumba target is characterised by

multiple parallel and anastomosing shear structures and quartz veins mapped in a >3km long and up to 600m wide corridor

 The shallow parts of the mineralised shears were

partially mined in the 1980-1990s

• Four, widely spaced, DD holes, totaling 1604

metres, were drilled into the target.

• All holes intercepted strong alteration,

sheared and mineralised structures and quartz veining.

• Significant intersections include:

 LZD0002: 1.5m @ 4.34g/t Au from 105m, 2.0m

@ 30.7g/t Au from 109m incl.

 LZD0004: 1.0m @ 1.10g/t Au from 129m; 1.6m @

6.40g/t Au from 225m

 LZD0006: 0.5m @ 2.65g/t Au from 328m; 1.0m

@ 3.30g/t Au from 368m

• Earning between 70-100% equity through in-

ground exploration spend on a large and under-explored land package

• H1 2018 Activities:

 Consolidation and interpretation of multi element

soil geochem data.

 Field follow up of identified anomalies. Detailed

regolith studies and alteration studies

 Extensive gold-soil anomalies across Frontier JV

project on regional soil sampling traverses associated with lithostructual targets

• H2 2018 Priorities:

 AC/RC drilling on Central Hounde JV and Frontier

JV targets for new discovery(s)

Burkina Faso – Houndé Belt progress

Four joint venture projects covering ~2,700sqkm of the Houndé Belt across 125km of favourable geology & structure

July 2018 2018 Interim Results Presentation 31

Mali

Excellent ground position on Senegal-Mali Shear Zone (SMSZ) with regional scale gold anomalies & early positive indications from drilling

• Known gold prospects, artisanal sites, and

large regional gold anomalies along SMSZ

• Hold five exploration permits covering

191 km2

• H1 work concentrated on consolidating

available data and, where required, collecting additional information to improve our understanding of the target

• areas. Work included multi element soil

data interpretations, infill soil sampling and structural mapping.

• AC follow up drilling at Tintinba started in

Q2, early onset of rainy season stopped drilling prematurely. Assay results awaited.

July 2018 2018 Interim Results Presentation 32