September 2014
African Barrick Gold Company Presentation September 2014 Important - - PowerPoint PPT Presentation
African Barrick Gold Company Presentation September 2014 Important - - PowerPoint PPT Presentation
African Barrick Gold Company Presentation September 2014 Important Notice This presentation includes forward-looking statements that express or imply expectations of future events or results. Forward-looking statements are statements that
Important Notice
This presentation 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, 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 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 presentation. 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, competition, fluctuations in the spot and forward price of 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), 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, ABG’s further 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 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 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
- r applicable law, ABG 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 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. Mineral reserves and mineral resources estimates contained in this presentation have been calculated as at 31 December 2013 in accordance with National Instrument 43-101 as required by Canadian securities regulatory authorities, unless otherwise stated. Canadian Institute of Mining, Metallurgy and Petroleum (CIM) definitions were followed for mineral reserves and resources. The figures stated are estimates and no assurances whatsoever can be given that the indicated quantities of metal will be produced. In addition, totals stated may not add up due to rounding. For more information regarding the nature of reserves and resources estimates and relevant CIM definitions, please see page 90 of ABG’s 2013 Annual Report and Accounts. You are reminded that you have received this presentation subject to the disclaimer and important notices contained herein and on the basis that you are a person to whom this presentation may be lawfully made and delivered in accordance with the laws of the jurisdiction in which you are located. You may not and are not authorised to: (i) reproduce or publish this presentation;
- r (ii) distribute, disclose or pass on this presentation to any other person, in whole or in part, by any medium or in any form, whether electronically or otherwise. ANY FORWARDING,
DISTRIBUTION OR REPRODUCTION OF THIS PRESENTATION IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS. BY ACCEPTING THIS PRESENTATION, YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS.
1
Contents
2
- 1. Background
2
- 2. Operational Overview
7
- 3. Financial Review
13
- 4. Investment Proposition
18
- 5. Appendix
20
Where We Operate
3
Ticker:
ABG
Listing:
London Stock Exchange (FTSE 250) Dar es Salaam Stock Exchange
Market Cap:
$1.6 billion
Major Shareholders:
Barrick, M&G, Franklin Templeton, L&G, Blackrock, Wellington
Overview
4
- Strong production base in Tanzania with a high quality, high grade reserve base
‒
Guiding for production in excess of 700koz in 2014
- Continuing improvement in cost base with seven successive quarters of reductions in AISC
‒
Reduced AISC from $1,709/oz in Q3 2012 to $1,105/oz in Q2 2014
- Free cash flow positive in Q2 2014 - cash position of $270 million as at 30 June 2014
–
First quarter of positive cash flow since 2012
- Delivering quarter on quarter operational improvements across the portfolio
High quality asset base – delivery on operational turnaround key to cash flow generation
1,012 958 893 862 728 774 756 749 790 1,709 1,675 1,577 1,404 1,270 1,162 1,131 1,105 1,175
400 800 1,200 1,600 2,000 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 FY14e Cash cost / ounce AISC / ounce
Continued Consistent Reduction in Costs
5
Evolution of Cash Cost and All I n Sustaining Cost (US$/ ounce sold)
(US$/oz) 1,100 to 1,175 740 to 790
Continuing to Deliver on Stated Targets and Expansions
6
Milestone Achieved
Quarter on quarter reduction in AISC
Grade improvement at Bulyanhulu
CIL Expansion moved into commissioning phase
Board approval of Upper East Project
Reduction in outstanding indirect tax receivables
First production from CIL Expansion
Group net cash generation
Consistent step up in Bulyanhulu development rates Q3 2014 First ore from Bulyanhulu Upper East Q3 2014 Board approval of Gokona Underground Q4 2014 Achievement of US$185 million of cost savings Q4 2014 First ore from Gokona Underground Q1 2015
Contents
7
- 1. H1 2014 Highlights
2
- 2. Operational Overview
7
- 3. Financial Review
13
- 4. Investment Proposition
18
- 5. Appendix
20
Asset Overview - Bulyanhulu
8
- Accelerate development and improve access
to higher grade stopes
- Reduce amount of equipment in operation in
- rder to improve productivity
- Commission CIL Expansion through Q2,
adding 40kozpa at AISC of less than $800/oz
2014 Key I nitiatives Progress
- Grade increased by 9% over H1 13, developing
Deep West to increase this further
- Parked up 3 jumbos and now delivering
increased development metres
- First gold produced in Q2
Asset Overview - North Mara
9
- Complete study into mining Gokona Cut 3 via an
underground operation
- Reduce number of high cost international
employees
- Improve maintenance practices to reduce costs
and improve availabilities
2014 Key I nitiatives Progress
- Study on track for Q4 Board approval,
development of exploration portal underway
- International employees reduced by 36% year
- n year
- Condition based monitoring and a smaller fleet
reduced maintenance costs by 10% YoY
Asset Overview - Buzwagi
10
- Optimise crusher and mill performance to
exceed nameplate capacity
- Reduce levels of inventory and improve
planning processes
- Improve power mix of the mine to continue to
reduce reliance on diesel generated power
2014 Key I nitiatives Progress
- Mill performance behind plan due to mill re-
lines and gearbox issues, both resolved in Q2
- US$6m reduction in operating supplies during
H1
- Optimisation of power mix ongoing, expect
improvements in H2 post gearbox resolution
Outlook
11
Cash Costs (US$ per ounce sold) Production (koz)
626 642
500 550 600 650 700 750 2012 2013 2014E
941 827 775
500 600 700 800 900 1,000 2012 2013 2014E
Ounces (000’s) Cash Costs per Ounce Sold (US$/oz)
All I n Sustaining Cost (US$ per ounce sold) Capital Expenditures (US$ Million)
1,585 1,362
500 750 1,000 1,250 1,500 1,750 2012 2013 2014E
AIS C per Ounce Sold (US$/oz)
Sustaining, 186 Sustaining, 112 Sustaining, 80-90 Cap Dev't, 120 Cap Dev't, 172 Cap Dev’t 125-135 Expansion, 50 Expansion, 117 Expansion, 50
- 100
200 300 400 2012 2013 2014E
US/$ million
700+ 740-790 1,100-1,175
CSR Initiatives - Screening of the World Cup
12
Contents
13
- 1. H1 2014 Highlights
2
- 2. Operational Overview
7
- 3. Financial Review
13
- 4. Investment Proposition
18
- 5. Appendix
20
Financial Highlights
14
Six months ended 30 June (Unaudited, in US$'000 unless otherwise stated) 2014 2013 %
Revenue 445,509 487,360 (9%) EBITDA1 131,621 130,771 1% Net earnings / (loss) 40,822 (701,230) nm Basic earnings / (loss) per share (EPS) (cents) 10.0 (171.0) nm Dividend per share (cents) 1.4 1.0 40% Cash and cash equivalents 269.6 320.9 (16%) Cash generated from operating activities 127.1 99.0 28% Operating cash flow per share (cents) 1 31.0 24.1 29% Capital expenditure2 114,744 209,056 (45%) Long term debt (Borrowings) 142,000 80,000 78%
1 Non-IFRS financial performance measures with no standard meaning under IFRS. Refer to ”Non IFRS measures”’ on page 23 of half-year results for definitions. 2 Excludes non-cash reclamation asset adjustments and includes finance lease purchases..
Significant year on year reduction in AISC
1,483 124 14 3 92 138 1,118
800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600
AISC H1 2013 Total cash costs Corp Admin Other Capitalised Dev't Sustaining capital AISC H1 2014 2014 AISC Guidance AISC per Ounce Sold (US$/oz)
15
1,100 to 1,175
16
US$ million
25 50 75 100 125 150 175 200 50 100 150 200 250 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Other Sustaining capital Corp admin G&A Contracted Services Maintenance Consumable Energy Labour Production
Koz
Reducing quarterly gross spend whilst increasing production(1)
Reducing Gross Spend
(1) Excludes expansionary capital spend
Capital Allocation - Generated net cash flow in Q2 2014
Cashflow Movements
17 254 67 43 6 3 270 200 225 250 275 300 325 350
Cash at Mar 2014 EBITDA Sustaining capital Expansion capital Other Cash at Jun 2014
US$ million
Contents
18
- 1. H1 2014 Highlights
2
- 2. Operational Overview
7
- 3. Financial Review
13
- 4. I nvestment Proposition
18
- 5. Appendix
20
Investment Proposition
19
- Operational stability throughout the group
- Production guidance increased to over 700koz
- Cost discipline embedded across business
–
Seven successive quarterly reductions in AISC
- Operating and capital controls enforced
–
Positive cash flow generation
- Prioritising allocating capital to shareholders
–
Consistent dividend payout
We have created a strong base to leverage future operational transformation
Where we stand today... Where we are heading...
- Re-engineering the mines
- Bulyanhulu performing to its potential
- Re-designing structures and roles
- Right sizing the workforce
- Cultural transformation
- Driving accountability and performance
- Proactive stakeholder engagement
- Building strong relationships
Contents
20
- 1. H1 2014 Highlights
2
- 2. Operational Overview
7
- 3. Financial Review
13
- 4. Investment Proposition
18
- 5. Appendix
20 a) Exploration and Development
b) Key Statistics c) Reserves and Resources
21
- The Upper East Zone is approximately 1.5 km east
- f the process plant
- Contains approximately 1.8 million gold ounces at
an average 9.05g/t from surface to 1 km depth within Reef 1 and Reef 2
- Included in current reserves, but was not scheduled
for mining until later in the mine life
- Initially uses excess milling capacity in the process
plant, followed by planned debottlenecking of plant to increase capacity
- Able to truck ore to surface, bypassing the shaft
- Limited 2014 capital of US$15 million, categorised
as capitalised development and included in AISC
- Production of 15koz in expected in H2 2014
- LOM all-in sustaining costs of under US$900 per
- unce
Bulyanhulu Upper East Zone
Exploration – Bulyanhulu Deep Extension Drilling
- In H1 2014, we continued to target extensions of the Reef 1 and Reef 2 vein series from 400 metres to
1,200 metres west of the current resource
- Additionally, holes will also intersect the Reef 2 vein series up to 2 kilometres west of currently delineated
underground resources (see next page)
- The drilling programme is expected to be completed during H2 2014 with a single rig drilling a further
2,500 metres of diamond core drilling
- This programme will form an important part of our assessment of how to most effectively develop the
Bulyanhulu mine over the longer term
22
BGMDD0056W1
0.50m @ 1.60g/t Au
UX4700-407
0.5m @ 62.9g/t Au
BGMDD0054W1
1.29m @ 11.7g/t Au
BGMDD0054W2
4.50m @ 8.05g/t Au
BGMDD0054W4
1.60m@2.25g/t Au
BGMDD0054W5
Assays pending
BGMDD0054W6
In ProgressBGMDD0056W2
In progressBGMDD0056W3
PlannedBGMDD0056
PlannedBGMDD0054
0.79m @ 10.8g/t Au
Bulyanhulu Reef 2M Long Section & Current Drilling
- The East Deeps drilling programme targeting down dip mineralisation of the Bulyanhulu Reef 2 system
- utside the current resource model was completed during H1 2014 for a total of five holes for 5,598m
- Results were encouraging with the following intersections:
‒ UX4700-405: 1.0m @ 19.0 g/t Au ‒ UX4700-407: 1.28m @ 76.7 g/t Au
- These intersections continue to prove continuity at depth of the mineralisation with high grade. This has
the potential to add to the mine resource in this area, with the high grade shoot remaining open at depth.
‒ UX4700-408: 1.75m @ 13.7 g/t Au ‒ UX4700-410: 0.5m @ 18.4 g/t Au
UX4700-408
1.75m @ 13.7g/t Au
BGMDD0055W1
0.59m @ 18.8g/t Au
BGMDD0054
1.70m @ 11.4g/t Au
BGMDD0054W2
1.00m @ 3.43g/t Au
BGMDD0056W1
0.50m @ 9 4.6g/t Au
UX4700-407
1.28m @ 76.7g/t
UX4700-410
0.50m @ 18.4g/t Au
UX4700-409
0.55m @ 8.70g/t Au
UX4700-405
1m @ 19.0g/t Au
BGMDD0054W1
0.63m @ 6.3g/t Au
Exploration – Kenya Joint Ventures
24
- Aircore drilling testing gold-in-soil anomalies
along the Liranda Corridor on the south side of the Kakamega Dome continued throughout H1 2014, with a total of 830 holes completed for 32,215 metres
- 87 holes intersects zones of > 0.5g/t
- New significant intersects include:
‒ KDAC0617: 6m @ 7.7 g/t Au incl. 3m @ 13.7 g/t ‒ KDAC0832: 12m @ 2.77 g/t Au incl. 3m @ 9.11 g/t ‒ KDAC0841: 15m @ 1.94 g/t Au and 6m @ 4.35 g/t ‒ KDAC0858: 6m @ 22.3 g/t Au incl. 3m @ 44 g/t ‒ KDAC0860: 27m @ 1.31 g/t Au incl. 15m @ 2.16g/t ‒ KDAC0877: 12m @ 12.6g/t Au incl. 3m @ 46.3 g/t
Map of gold in soil anomalies within the Liranda Corridor within the Kenya JV Licence areas
- In tandem, a total of 147 line kilometres of gradient and pole-dipole IP and Resistivity surveys have now been
completed throughout the Lake Zone Camp
‒ Ten targets showing distinct resistivity and/or chargeability zones coincident with the gold-in-soil anomalies have been delineated
Contents
25
- 1. H1 2014 Highlights
2
- 2. Operational Overview
7
- 3. Financial Review
13
- 4. Investment Proposition
18
- 5. Appendix
20
a) Exploration and Development
b) Key Statistics
c) Reserves and Resources
H1 2014 Operating Metrics
Bulyanhulu North Mara Buzwagi Group Half Year ended 30 June H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 H1 2014 H1 2013 Tonnes Mined Kt n/a n/a 8,118 11,395 11,346 17,305 19,892 29,118 Ore tonnes hoisted / Mined Kt 428 418 1,126 1,458 2,354 1,501 3,908 3,378 Ore milled Kt 425 414 1,365 1,280 1,980 2,290 3,770 3,983 Head grade g/t 8.4 7.7 3.6 3.6 1.8 1.3 3.2 2.7 Mill recovery % 91.6% 91.0% 87.3% 87.1% 90.3% 88.2% 89.5% 88.9% Ounces produced
- z
105,420 92,974 138,816 128,478 102,344 85,746 346,581 307,198 Ounces sold
- z
101,165 87,802 137,340 130,200 92,442 96,367 330,947 314,369 Cash cost $/oz 867 1,033 584 739 879 918 752 876 All-in sustaining cost $/oz 1,249 1,581 936 1,313 1,169 1,643 1,118 1,483 Copper production Klbs 2,431 2,238 n/a n/a 3,999 3,346 6,430 5,584 Copper sold Klbs 2,347 2,035 n/a n/a 3,044 4,078 5,391 6,113
26
Capital Allocation – H1 2014
Cashflow Movements
27 282 132 7 90 319 11 27 8 3 270 200 250 300 350 400 450
Cash at Dec 2013 EBITDA Working capital investment Sustaining capital Cash post Sustaining Spend Exploration Expansion Capex Dividends Other Cash at Jun 2014
US$ million
Q2 2014 Operating Metrics
Bulyanhulu North Mara Buzwagi Group Three Months ended 30 June Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Q2 2013 Tonnes Mined Kt n/a n/a 4,335 6,420 5,803 8,475 10,355 15,141 Ore tonnes hoisted / Mined Kt 217 246 566 681 1,333 800 2,115 1,727 Ore milled Kt 205 243 710 634 1,010 1,197 1,925 2,072 Head grade g/t 8.3 7.8 3.5 3.6 1.9 1.4 3.2 2.7 Mill recovery % 91.5% 90.7% 86.9% 87.0% 91.9% 87.3% 89.8% 88.8% Ounces produced
- z
50,241 54,938 70,177 63,774 57,787 45,726 178,206 164,439 Ounces sold
- z
52,044 54,386 70,040 71,150 49,479 44,556 171,563 170,092 Cash cost $/oz 919 936 561 684 837 1,054 749 862 All-in sustaining cost $/oz 1,348 1,375 893 1,266 1,078 1,632 1,105 1,404 Copper production Klbs 1,135 1,382 n/a n/a 2,318 1,740 3,453 3,122 Copper sold Klbs 1,153 1,167 n/a n/a 1,721 1,589 2,874 2,756
28
Contents
29
- 1. H1 2014 Highlights
2
- 2. Operational Overview
7
- 3. Financial Review
13
- 4. Investment Proposition
18
- 5. Appendix
20
a) Exploration and Development b) Key Statistics
c) Reserves and Resources
Reserves and Resources
30
2013 YE 2012 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) 29,610 9.530 9,072 28,990 11.335 10,564 Proven and probable (Tailings) 7,974 1.229 315 7,974 1.229 315 Mineral Resource (U/G) 10,225 10.653 3,502 10,672 9.675 3,320 Inferred (U/G) 6,632 12.877 2,745 8,465 11.949 3,252 Buzwagi Proven and probable 24,105 1.445 1,120 63,333 1.325 2,697 Mineral Resource 49,109 1.291 2,038 14,875 1.019 487 Inferred 7,173 1.183 273 7,211 1.101 255 North Mara Proven and probable 21,710 3.169 2,212 34,207 2.739 3,012 Mineral Resource 25,266 3.316 2,694 19,117 3.921 2,410 Inferred 735 2.730 65 1,077 3.663 127 Total Exploration Proven and probable
- - -
- Mineral Resource
105,296 1.422 4,812 89,333 1.540 4,424 Inferred 4,456 1.352 194 15,885 1.851 945 Total* Proven and probable 83,399 4.743 12,719 134,533 3.839 16,604 Mineral Resource 189,895 2.137 13,046 134,660 2.490 10,782 Inferred 18,995 5.365 3,276 32,767 4.365 4,599
2012 total include Tulawaka ounces 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
Bulyanhulu 2013 Year End Reserves
31