african barrick gold plc (the “company” or...
TRANSCRIPT
22nd October 2012
African Barrick Gold plc (the “Company” or “ABG”)
Final Condition for Acquisition of Aviva Mining Kenya Ltd Satisfied
Following the unanimous approval by Aviva shareholders on 11 September 2012, the Kenyan
Competition Commission has now formally approved the acquisition by ABG of Aviva Mining
(Kenya) Ltd (“AMKL”) from Aviva Corporation (“Aviva”). All conditions have now been satisfied and
the transaction will now be finalised.
Commenting on the acquisition, ABG’s CEO Greg Hawkins said, “With the final condition for the
acquisition of AMKL now satisfied we look forward to continuing the successful exploration programme on
this highly prospective land package. ABG has a proven track record of successfully developing early stage
prospects into large scale deposits and we are confident of further successes in Kenya.”
On completion of the acquisition of AMKL, we plan to continue systematic exploration programmes
throughout the licence areas testing for new gold targets and we are targeting advancing one or more
projects to resource category level during 2013. These exploration programmes will consist of mapping, soil
and rock chip sampling campaigns, auger and aircore drilling, and reverse circulation and core drilling. The
current core drilling programme is testing high priority regional targets in order to gain a better understanding
of the geology and key controls on the gold mineralisation encountered at each prospect and to allow
ranking of targets for future programmes.
Recent drill results, funded by ABG and released by Aviva, around the Kakamega Dome from the
Bushiangala, Kimingini, Dhahabu and Isulu prospects have delivered some high-grade gold intersections
within a greater than 30 kilometre structural corridor extending from the historic Rosterman gold mine
(approximately 250,000 ounces of gold at 13 grams per tonne) in the northwest to the Dhahabu prospect in
the east (Figure 1). Selected, previously announced, results from the Kakamega Dome gold camp have
included:
Bushiangala:
ASBSDD0001: 20m at 9.41g/t Au from 29m and 1m at 1205g/t Au from 101m
ASRC019: 7m at 8.29g/t Au from 98m
ASRC021: 17m at 7.20 g/t Au from 25m
ASBSDD006 6m at 5.02g/t Au from 38m and 16m at 5.91g/t Au from 58m
ASBSDD010: 11m at 3.96g/t Au from 49m and 2.93m at 7.77g/t Au from 97m
ASBSDD012: 9m at 13.05g/t Au from 6m
Kimingini:
ASRC025: 9m at 12.7g/t Au from 139m
ASKDD003: 3m at 5.31g/t Au from 228m
ASKDD004: 3m at 10.23g/t Au from 156m
Dhahabu:
CKIB01: 62m at 2.45g/t Au from 42m
KIB-01: 10m @ 5.9g/t Au from 43m
KIB-02: 7m @ 5.4g/t Au from 42m
KIB-03: 10m at 5.7g/t Au from 29m
We believe there is an opportunity to identify several significant scale projects in the structural corridors
around the Kakamega Dome, and ongoing drill programmes will target extensions to the known gold zones
between individual prospects to delineate sizeable mineral deposits.
Figure 1 – Kakamega Dome Camp, selected drill intersections, surface geochemistry and structural corridors
The Lake Zone Camp (Figure 2 - below) is located across the western half of the license areas and
is distinguished from the Kakamega Dome Camp based on its geological and structural setting. The
Lake Zone camp is characterised by mafic, intermediate and felsic volcanic units of the Archaean
(Nyanzian) system that have been intruded by numerous multi-phase felsic, intermediate and mafic
composition intrusions (granite, dacite, granodiorite, diorite, and gabbro). Distinct bands of Kavirondian age
sedimentary units (predominantly conglomerate) are interpreted to lie adjacent to large-scale east-west
trending structures.
A large number of the gold occurrences identified in the Lake Zone camp are associated with multiphase
intrusions and gold mineralisation tends to occur as broad disseminated systems, with stock-work higher
grade veining or extensional vein systems.
As with the Kakamega Dome, ABG believes the Lake Zone gold camp has the potential to host very large
gold systems and the limited effective drilling to date has confirmed that potential. This is supported by
historical and recent exploration, including soil sampling, rock chip sampling and drilling programmes that have
delineated several kilometre-scale gold anomalies.
Figure 2 – Lake Zone Camp – Geology, historical workings and prospects and high priority targets
Geology
The licence areas cover the Ndori Greenstone Belt, one of several greenstone belts in Kenya. The Ndori
Greenstone Belt displays a similar stratigraphy to the Lake Victoria Greenstone belts in Tanzania and other
greenstones belts globally (e.g. Abitibi in Canada) with volcanic, intrusive and sedimentary rocks of the
Archaean (Nyanzian) system, Kavirondian sediments, and younger felsic to intermediate intrusions varying in
composition (granite, dacite, granodiorite, diorite) and often multiphase. Local lithologies include iron-rich
basalts and gabbros, andesite, felsic volcanic, BIF-chert-tuff chemical and pyroclastic-sedimentary
sequences, as well as late Archaean volcano-sedimentary lithologies within a broad greenstone belt. Over
twenty gold prospects worthy of further work have been identified across the project to date. In addition,
Bumbo, a stratabound Copper-Zinc-Gold deposit, is currently interpreted to occur within sediments of the
Kakamega Dome gold camp.
Figure 3 – AMKL License Areas - Regional Geology, Gold Camps, Historic Workings, and Key Prospects
Background
Through the acquisition of AMKL, ABG will now own AMKL’s 51% interest (with the potential to move to
75%) in a joint venture (“Lonmin JV”) with Lonmin plc (“Lonmin”, LSE:LMI), and AMKL’s right to earn up to a
75% interest in a second joint venture (“Advance JV”) with Advance Gold Corporation ("Advance",
TSXV:AAX). The exploration properties subject to the Lonmin JV and the Advance JV are referred to herein
as the “Properties”. In addition to the initial cash consideration of A$20 million, ABG has agreed to make a
further cash payment of A$10 million to Aviva upon declaration by ABG of an National Instrument 43-101
(“NI 43-101”) compliant Indicated resource of 3 million ounces of gold on the Properties.
The principal assets of the Lonmin JV are two Special Licenses in West Kenya (SL123 Ndori and SL213
Siaya, the “Lonmin JV Licenses”). Lonmin, through its subsidiary AfriOre International (Barbados) Limited
(“AfriOre”), holds the remaining 49% interest in the Lonmin JV. Under the terms of the agreement governing
the Lonmin JV (“Lonmin JV Agreement”), AMKL would be entitled to increase its interest in the Lonmin JV
from 51% to 75% by meeting certain conditions which include advancing the project through the pre-
feasibility stage. The terms of the Lonmin JV Agreement will remain unchanged following the acquisition of
AMKL.
The principal assets of the Advance JV are three Special Licenses in West Kenya (SL265 Bukura, SL266
Sigalagala and SL267 Rosterman, together, the “Advance JV Licenses”). Under the terms of the agreement
governing the Advance JV (“Advance JV Agreement”), AMKL would be entitled to acquire up to a 75%
interest in the Advance JV from Gold Rim Exploration Kenya Limited (“Gold Rim”), a subsidiary of Advance,
by meeting certain conditions which include making pre-defined exploration expenditures as set out in the
Advance JV Agreement. The terms of the Advance JV Agreement will remain unchanged following the
acquisition of AMKL.
The Properties, which have only seen limited previous exploration, contain multiple large gold anomalies and
cover five contiguous licenses over a land package in excess of 2,800km2 of the highly prospective Ndori
Greenstone Belt in Kenya, which forms part of the Tanzanian Archaean Craton. Sporadic, historic and
current exploration activities have identified a large number of targets that justify extensive follow-up, and
ABG intends to implement a systematic and focused gold exploration programme. These targets represent a
significant addition to the grassroots and target delineation segments of our exploration pipeline.
Transaction Description and License Details
ABG has agreed to pay initial cash consideration of A$20 million, plus an amount equal to the completion
working capital of AMKL to Aviva to acquire all of the outstanding share capital of AMKL, with a further
potential cash payment of A$10 million to Aviva upon declaration by ABG of an NI 43-101 compliant
Indicated resource of 3 million ounces of gold on the Properties. The cash consideration will be satisfied by
cash on hand.
Asset Location
The Properties are located in the southwest corner of Kenya, approximately 300km northwest of Nairobi,
near the border of Uganda and on the shores of Lake Victoria. The license area is 30km from Kisumu, which
is the third largest city in Kenya, and is serviced by air (with a daily flight from Nairobi), road, power, and
telecommunication networks. Tenements are cut by a bitumen dual carriageway and a system of local
unpaved roads and are inhabited by mainly small scale subsistence farmers. There is a 750km rail
connection to the port of Mombasa, where ABG has an existing supply chain as a result of 90% of North
Mara’s goods and major equipment for all of ABG’s sites coming through the port.
In addition to the special licenses, the acquisition of AMKL will bring ABG a strong Kenyan based exploration
team and continuity of project history and knowledge, as well as existing local and country Government and
Ministry relationships.
ENQUIRIES
For further information contact:
African Barrick Gold plc +44 (0)207 129 7150
Andrew Wray, Head of Corporate Development & Investor Relations
Giles Blackham, Investor Relations Manager
RLM Finsbury +44 (0)207 251 3801
Charles Chichester
About ABG
ABG is Tanzania’s largest gold producer and one of the five largest gold producers in Africa. We have four
producing mines, all located in northwest Tanzania, and several exploration projects at various stages of
development. We have a high-quality asset base, solid growth opportunities and a clear strategy.
The key pillars to our strategy are:
driving operating efficiencies to optimise production from our existing asset base;
growing through near mine expansion and development of advanced-stage projects; and
organic greenfield growth and acquisitions in Africa.
Maintaining our licence to operate through acting responsibly in relation to our people, the environment and
the communities in which we operate is central to achieving our objectives.
ABG is a UK public company with its headquarters in London. We are listed on the Main Market of the
London Stock Exchange under the symbol ABG and have a secondary listing on the Dar es Salaam Stock
Exchange. Historically and prior to our initial public offering (IPO), our operations comprised the Tanzanian
gold mining business of Barrick Gold Corporation (Barrick), our majority shareholder. ABG reports in US
dollars in accordance with IFRS as adopted by the European Union, unless otherwise stated in this
announcement.
Forward-looking statements
This announcement is for information purposes only and does not constitute an invitation or offer to
underwrite, subscribe for or otherwise acquire or dispose of any securities of ABG in any jurisdiction.
This announcement 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, products
and services, 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. 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 in
countries in which ABG conducts or may in the future conduct business, future 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, Kenyan shilling and Tanzanian shilling
exchange rates), ABG’s ability to successfully integrate this and future 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 successfully and in a timely manner process its mineral
reserves, risk of 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. 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 in this announcement. Any forward-looking statements in this
announcement 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 release the result of any revisions to any forward-looking statements in
this announcement that may occur due to any change in ABG’s expectations or to reflect events or
circumstances after the date of this announcement. Nothing in this announcement should be construed as a
profit forecast or estimate.