African Barrick Gold. BMO Global Metals & Mining Conference February 2013

Transcription

1 African Barrick Gold BMO Global Metals & Mining Conference February 2013

2 Disclaimer Important Notice This presentation has been provided to you for information purposes only. It does not constitute an offer, solicitation, invitation or inducement to purchase, subscribe or otherwise acquire or to sell or otherwise dispose of any securities of African Barrick Gold plc ("ABG") or any of its affiliates or engage in any investment activity in connection with the capital of ABG or any of its affiliates in any jurisdiction. The information or opinions contained in this presentation shall not form the basis of, or be relied on in connection with, or act as any inducement to enter into, any contract or commitment or investment decision whatsoever in connection with ABG or any of its affiliates. The information and opinions contained in this presentation are provided as of the date of this presentation, are subject to change without notice and are not purported to be comprehensive. ABG explicitly disclaims any responsibility, obligation or undertaking to update, correct or revise any information contained in this presentation after its date, whether as a result of new information, future events or otherwise. No reliance may be placed for any purpose whatsoever on, and no representations or warranties, express or implied, are given in respect of, the information or opinions contained in this presentation or on or in respect of its accuracy or completeness and no liability whatsoever is accepted by ABG or any of its affiliates, or any of their respective directors, officers, employees or agents, in respect of the accuracy or completeness of the information contained in this presentation or for any loss howsoever arising from any use of this presentation or its contents. Certain information, statements, beliefs and opinions in this presentation are forward looking. 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," "expect," "anticipates," "believes," "intends," "estimates" and other similar expressions. All forward-looking statements involve a number of risks, uncertainties and other factors. Although ABG s management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of ABG, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, forward-looking information and 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, political, economic and business conditions, 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 and Tanzanian shilling exchange rates), ABG s ability to successfully integrate future acquisitions, 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 timely and successfully process its mineral reserves, trespass, theft and vandalism, changes in its business strategy, as well as risks and hazards associated with the business of mineral exploration, development, mining and production. Accordingly, no reliance should be placed on forward-looking statements contained in this presentation. Any forward-looking statements in this presentation speak only as of the date of this presentation and 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 contained in this presentation, whether as a result of new information, future events or otherwise. No statements made in this presentation regarding expectations of future profits are profit forecasts or estimates, and no statements made in this presentation 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 or any other level. 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3 Introduction Strong production base in Tanzania and a long life, high grade reserve base Total Reserves and Resources in excess of 32 million ounces Strong balance sheet with a cash position of approximately US$400 million as at 31 December 2012 Disciplined allocation of capital while maintaining commitment to returning capital to shareholders Full year dividend of US16.3 cents, current dividend yield of over 3% Exciting pipeline of growth projects, enhanced by recent Kenyan acquisition 2

4 2012 Highlights Operational Gold production of 626,212 ounces and cash costs of US$949 per ounce sold, within recent guidance Revenue of US$1,087 million, EBITDA of US$331 million, and adjusted EPS of US$25.7 cents (headline EPS of US$14.5 cents) Corrective actions implemented at Bulyanhulu, growth projects remain on track Higher grades accessed at North Mara, social licence to operate and land access remain key Step up in mining and milling rates at Buzwagi Decision not to further extend Tulawaka s mine life Corporate Renewal of the North Mara Special Mining Licences Acquisition of highly prospective exploration properties in Kenya Offer process with China National Gold Operational Review initiated to drive improved returns and free cash flow generation Dividend payout maintained, representing a yield of over 3% Financial flexibility maintained, US$401 million of cash on balance sheet 3

5 2013 Outlook Outlook Production of 540,000 to 600,000 ounces of gold Total cash costs of US$925 US$975 per ounce sold including royalties Incorporates a US$120 per ounce reduction resulting from the adoption of the new accounting standard for deferred stripping (IFRIC 20) Will move to an all-in cost measure once defined by the World Gold Council Sustaining Capital Sustaining Capital, including land, of US$100 million Capitalised Development / Stripping of US$210 million (including US$70 million due to IFRIC 20) Expansionary Capital: CIL Expansion US$105 million (fully debt financed) Bulyanhulu Upper East US$10 million pre Board approval Other projects amounting to US$15 million 4

6 Operational Review What have we achieved? What is our current focus? Over last 3 years, we have generated substantial free cash flow whilst prioritising capital returns and long term investment Returned in excess of US$150 million to shareholders (1) Invested over US$750 million in the asset base Acquired two early stage projects with potential to deliver long-term value US$401 million on the balance sheet Undertaking a full review of the business from the mining face through to corporate offices Designed to address an evolving operating environment and ensure the business is sustainable, competitive and free cash flow generating Continuous development of the asset base Key focus is on ensuring value accretive production that drives returns to all of our stakeholders Own one of the highest quality portfolio of assets in Africa with over 32Moz of reserves and resources in Tanzania Fully replaced reserves and resources in 2012 Progressed social licence to operate at North Mara (1) Including the 2012 Final Dividend of US$50 million 5

7 Guiding Principles of the Operating Review Cost and organisational structure appropriate to the scale of the business Focus on value accretive production in order to drive returns Organic growth capital driven and prioritised by returns Asset review based on cash flow generation not scale Social licence to operate a pre-requisite for all assets Commitment to delivering capital distributions to shareholders Improving returns and driving free cash flow generation Continuing disciplined approach to targeting gold assets across Africa 6

8 Key Initiatives Operating cost Reduction Continue to review alternatives to reduce reliance on diesel self generation Optimisation of management operating systems and supply chain practices Capital Discipline Reduced 2013 sustaining capital expenditure by over US$50 million against 2012 Long-term capital discipline to be core element of planning process Organisational Structure Review Simplify corporate structure to improve responsiveness of the organisation Zero based review to assess the appropriate number and mix of employees and contractors Corporate Overhead Cost Reductions Recalibrate the corporate support / service model to match the business model Key opportunities to revise support function model Mine Planning Deliverability Review and optimise the LOMs at each mine to prioritise driving returns and cashflow Productivity gains through improved organisational structure and training 7

9 Capital Discipline Maintained a disciplined approach to capital expenditure over the past three years Invested over US$750 million into the business in order to stabilise our asset base Provides well invested, modern mines, such that we should be able to substantially lower our capital budget going forward 2013 capital expenditure guidance of US$100 million of sustaining capital Initial reduction of over US$50 million from the 2012 sustaining capital expenditure Reassessing all of our future capital expenditure to identify further opportunities to cut capital expenditure further into 2014 and beyond 8

10 2013 Asset Key Focus Areas Bulyanhulu Resolve paste fill plant issues Increase availability of higher grade stopes Stabilise and rebuild Tanzanian workforce Progress CIL Expansion and Upper East projects Buzwagi Continue to operate at nameplate capacity in the process plant Sustain increased level of mining rates Optimise the power mix for the mine Minimise additional capital investment North Mara Maintain Q4 s increased mining rates into 2013 Continue to deliver improved recoveries Progress land acquisitions and relocations Finalise lifting of EPO Continue to improve social licence to operate Tulawaka Harvest high grade pillars and close/divest operation Implement closure plan in conjunction with the Tanzanian government Redeploy employees within the portfolio 9

11 us$ million Opportunities to Reduce Direct Mining Costs Aim to reverse cost increases since Enhanced freight procedures and supply chain efficiencies Improved tracking and process Maintenance $98m Consumables $106m 2012 Labour $178m Zero based budgeting process and localisation Alternative energy and power optimisation technology Energy $138m G&A $91m Contract services $90m Revised support model Improved supplier contracts Labour Contract services G&A Energy Maintenance Consumables Capitalised Mining Labour Related Activity Related 10

12 Next Steps Review Process Review led by CEO, with CFO, COO and VP Org Effectiveness having direct responsibility for outcomes Multi-functional teams will focus on cost reduction in key cost areas Will draw on consultants where appropriate to expedite outcome Projects ranked based on execution criteria: Speed to benefit Materiality of benefit Assessment of impact on business Execute with targets, timelines and accountabilities Market Updates Process will be largely complete in six months Will release updates to the market with our periodic results releases Initial timescale for each initiative: Corporate Overhead Cost Reduction: ~3 months Operating Cost Reduction: ~6 months Mine Planning Deliverability: ~6 months Organisational Structure Review: ~6 months Capital Discipline (ongoing) Comprehensive overview of final review outcomes during Q exit rate intended to be sustainable for

13 Exploration and Growth Projects West Kenya JV Project Bulyanhulu CIL Expansion Project execution underway EPC contract and project financing agreed Production of ~40Kozpa starting in walk up drill targets Extensive review of prospects in H Gokona Expansion ~1Moz of additional resource delineated around current open pit Bulyanhulu Upper East Ordered certain long lead items Studies underway to mine Reef 2 in parallel with Reef 1 Targeting 90Kozpa once in full production Nyabirama Expansion Positive drilling to date Expanded drill programme to be undertaken Golden Ridge Looking at alternatives to develop deposit, including trucking to Bulyanhulu Nyanzaga Declared 4.6Moz in-pit resource Moved into pre-feasibility in H Ongoing property wide exploration Project Execution Feasibility Study Scoping/Pre- feasibility Study Grassroots / Target Delineation 12

14 Investment Proposition Strong production base in Tanzania and a long life, high grade reserve base Total Reserves and Resources in excess of 32 million ounces Strong balance sheet with a cash position of approximately US$400 million as at 31 December 2012 Disciplined allocation of capital while maintaining commitment to returning capital to shareholders Full year dividend of US16.3 cents, current dividend yield of over 3% Exciting pipeline of growth projects, enhanced by recent Kenyan acquisition 13