JOHANNESBURG (miningweekly.com) – Tanzania-focused gold producer Acacia Mining lifted gold production across all three of its producing mines by 13% to 718 651 oz for the year ended December 31.

Gold production at Bulyanhulu increased by 18% to 234 786 oz, while Buzwagi lifted output by 15% to 210 063 oz – delivering its highest ever year of gold production – and North Mara remained the group’s “standout performer”, producing 273 803 oz, as the grade from the Gokona pit continued to be strong.

Acacia outlined in a results statement on Monday that it had changed to a mechanised mining method at Bulyanhulu, with long-hole stoping becoming the prime mining method, replacing labour-intensive conventional hand-held mining.

The company also brought in contractors to accelerate development of the mine’s upper East and lower West zone, which was expected to improve mining flexibility and allow the group to mine at the reserve grade.

“During the year, we also commissioned the carbon-in-leach plant expansion at the mine, which will provide incremental low-cost ounces from the reprocessing of tailings,” outlined CEO Brad Gordon.

At North Mara, the company was, meanwhile, moving forward with the creation of an underground operation at one of the mine’s openpits, having had the project approved by the board in the fourth quarter of the year.

The mine’s Gokona underground project was expected to produce 450 000 oz of gold over a five-year mine life, with an all-in sustaining cost (AISC) of less than $750/oz.

“We believe that this will be more profitable than openpit mining and will have a much lower impact on the surrounding communities,” he commented.

At Buzwagi, Acacia shortened the life of the mine so that it was only mining profitable ounces and had amended its mine plan to allow it to produce a positive cash flow over each year of its remaining life.

‘WATERSHED’ YEAR
Gordon, meanwhile, described 2014 as a “watershed year” for Acacia, as the company returned to free cash generation for the first time since 2011, exceeding its initial production guidance and reducing AISC year-on-year by 18% to $1 105/oz.

Similarly, cash costs dipped 10% year-on-year to $732/oz sold, while the company’s operational review delivered cost reductions of $185-million, as planned, over the period.

“We have continued to deliver operationally and demonstrated consistent cost control, which has meant that we have now exceeded the planned savings set
out by the operational review 18 months ago,” he noted.

The company delivered revenue of $930-million for the year – in line with 2013 – as increased ounces sold of 703 680 oz offset the lower gold price.

Earnings before interest, taxes, depreciation and amortisation rose 5% year-on-year to $253-million, impacted by noncash charges of $27-million, while net earnings were $90-million, or $0.22 a share.

Operational cash flow increased by 55% to $290-million, while Acacia’s cash position increased by $11-million to end the year at $294-million.

Capital expenditure was $254-million, 34% lower than the prior year owing to revised mine plans and stringent capital controls

The company proposed a final year dividend of $0.04 a share, up 40% on the prior 12 months.

WEST AFRICA EXPANSION
Gordon added that the company had continued to work on enhancing its portfolio of assets and, during 2014, made its first entry into West Africa by entering into an earn-in agreement over the South Houndé project, in Burkina Faso.

“We believe that exploration is a significant driver of value for the business over the long term and now is the time to invest, which is a contrarian view to many in the market,” he commented.

The earn-in deal allowed Acacia to earn an interest of up to 75% over a four-year period in a project that already included a 1.5-million-ounce inferred resource.

“We also had a successful year within our existing exploration portfolio, with the drilling programmes at Bulyanhulu leading to the addition of 2.3-million ounces of gold into resources at very competitive costs.

“This is about half of our three-year target to add five-million ounces of gold resources at the mine as we look to ensure that production matches the geological endowment at Bulyanhulu,” he said.

Acacia also made “good progress” in Kenya, with an extensive and successful aircore drilling programme across the land package on the Ndori greenstone belt, which was now being followed up with deeper drilling.

“We will continue to look for further exploration acreage in West Africa,” Gordon advised.

The company expected to further increase its production to between 750 000 oz and 800 000 oz in 2015, predominantly in the second half, at a reduced AISC of between $1 050/oz and $1 100/oz, driven by further operational improvements and the planned ramp-up at Bulyanhulu.