ACACIA MINING PLC - Reissue : Response to Barrick announcement

Please be advised that this announcment is a reissue of the one published today at 09:08hrs. In the original announcement there was text omitted. The text originally omitted has been reinstated and is formatted in bold.  All other content remains unchanged.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

24 JUNE 2019

Acacia Mining plc

LSE:ACA

RESPONSE TO ANNOUNCEMENT FROM BARRICK REGARDING
THE SITUATION IN TANZANIA AND ACACIA’S MINE PLANS

Further to its announcement dated 19 June 2019, Acacia Mining plc (“Acacia” or “the Company”) today provides a detailed response to the announcement from Barrick Gold Corporation (“Barrick”) dated 18 June 2019 regarding the “Situation in Tanzania and Review of Acacia’s Mine Plans” (“the Barrick Announcement”).

The Company strongly disagrees with a number of matters set out in the Barrick Announcement, and has responded to certain of Barrick’s statements herein.

Summary

·   Acacia continues to believe that, subject to an offer price which is fair and which commands the requisite support of shareholders, the acquisition by Barrick of the Acacia shares it does not currently own, would be an attractive solution for key stakeholders.

·   However, the Company strongly disagrees with Barrick’s view on Acacia’s life of mine plans, which it understands to underpin Barrick’s valuation and price of the Proposal, and sees no reasonable basis for Barrick’s proposed adjustments.

    -   It is unclear to Acacia how Barrick can substantiate its proposed adjustments. The Company notes that it hosted Barrick representatives for brief site visits during Q1 2019, totalling seven days across three mines, and provided Barrick with the Company’s draft life of mine        plans, in each case to facilitate discussions by Barrick with the Government of Tanzania (“GoT”), rather than for due diligence for the Proposal[i].

    -   All the Company’s life of mine plans have been formulated in line with industry standard methodology.

    -   Additionally, the Company’s reserves and resources have been determined as at 31 December 2018 and reported in accordance with Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards (2014) as required by Canadian securities regulatory authorities, in line with the mineral reporting standards applicable to Barrick.

    -   Through Q4 2018 and 2019, prior to and independent of the Proposal, Acacia engaged SRK Consulting (UK) Limited (“SRK”), an independent technical consultant, to carry out a comprehensive review of its geological and resource modelling and preparation of its life of mine plans and Mineral Resource and Mineral Reserve statements. SRK’s comprehensive review and its advice to the Board concluded that the Company’s geological and resource modelling and processes which were used in formulating its life of mine plans and Mineral Resource and Mineral Reserve statements were robust.

    -   The independent directors of Acacia (the “Independent Directors”), made up of a number of highly experienced mining executives and non-executives alike, remain confident with the assumptions and basis for preparation of the Company’s life of mine plans.

    -   Further, the Company's view is that certain statements in the Barrick Announcement are inconsistent with public comments from senior Barrick representatives prior to the Proposal.

·   The Company also notes that the Proposal appears to have ignored the value of the Company’s portfolio of exploration and development assets, and the strategic value of the Company’s pre-emption rights pursuant to the Relationship Agreement between Acacia and Barrick.

·   Acacia believes that Barrick’s intervention in Acacia’s negotiations with the GoT, the length of time Barrick’s negotiations with the GoT have taken and the way they have managed their direct negotiations, have had the effect of undermining Acacia in Tanzania. Further, Acacia believes the perception that Acacia has been the roadblock to the settlement has led to a material deterioration of Acacia's operating position in Tanzania. For the record:

    -   Acacia did not invite Barrick’s intervention into the Company’s negotiations with the GoT.

    -   Acacia was continuing its own engagements with the highest levels of the GoT at the time and had no reason to believe that these engagements would not continue.

    -   Once Barrick had unilaterally intervened, and the GoT and Barrick had agreed to continue their direct discussions without the involvement of Acacia, only then did the Company make the pragmatic decision to provide support to Barrick in an attempt to reach a settlement.

    -   The Company did not consent to Barrick’s signing of a set of framework documents between Barrick and the GoT in October 2017, which have formed the basis of Barrick’s negotiations with the GoT thereafter, and had not approved or commented on the terms set out in the those framework documents.

    -   To date, the Company has never been provided with a complete or final set of agreements for the Board’s review and potential recommendation to Acacia shareholders.

·   The Company has previously disclosed the deteriorating operating environment in Tanzania following the ban on the export of mineral concentrates, including the consequences for the business.

·   Nonetheless, Acacia continues to operate its assets and achieve significant production, in line with guidance, and with strong cost control, despite the challenging operating environment.

·   The Board and Management of Acacia remain deeply concerned regarding the ongoing risks to our people, in particular the continued detention of three current or former employees of the Acacia group (who are former Barrick employees) and who remain detained in custody since October 2018 on criminal charges for a range of allegations, some of which predate Acacia’s 2010 public offering, without committal for trial or access to bail.

·   Absent a transaction with Barrick, Acacia’s desire is to engage with the GoT and continue to seek a negotiated resolution of the disputes.

·   To protect the interests of its stakeholders, the Company continues, only as a fall-back, to pursue international arbitration and alternative mechanisms where applicable.

·   The Company continues to operate with the best interest of its stakeholders in mind, and will seek to continue demonstrating its long-term commitment to Tanzania, its people and the mining industry going forward.

Following the receipt of Barrick’s Proposal, the Board of Acacia formed a committee of Independent Directors and the Chief Executive Officer (the "Transaction Committee"). The Transaction Committee continues to evaluate the terms of the Proposal and the strategic alternatives available to the Company in the absence of a recommendable offer from Barrick.

Proposal Value Considerations

Acacia notes a number of statements in the Barrick Announcement regarding Barrick’s valuation of Acacia and the merits of the value proposition to shareholders, which it considers misleading, so has provided clarification of these items below:

·   Barrick noted in the Barrick Announcement that its Proposal reflects a premium of 14.4% to the closing price on 20 May 2019. Whilst this is factually correct, the Company wishes to highlight that:

    -   The terms of the Proposal (the 0.153x exchange ratio) implied a 2.9% discount to the closing price of Acacia’s shares on 20 May 2019[ii], being the last day prior to the receipt of the Proposal.

    -   During the period from 20 May 2019 to 17 June 2019, being the last day prior to the Barrick Announcement, there was a material increase in the gold price by 5% and the FTSE Gold Mines index by 15%[iii].

    -   Assuming Acacia were to have traded in line with the FTSE Gold Mines index, the current Proposal would have remained at a discount, of 2.1%[iv], to the pro forma adjusted market price.

    -   On this basis, Acacia considers that Barrick’s presentation of the Proposal as representing a “premium” is misleading.

·   Barrick also asserted that the Proposal seeks to “give minority shareholders of Acacia the ability to benefit from any future potential upside in the Acacia assets”. Regarding this statement Acacia notes:

    -   Based on the terms of the current Proposal, the Acacia shareholders independent of Barrick (“Minority Shareholders”) aggregate holdings would make up only 1.27% of the post-transaction issued share capital of Barrick[v] as opposed to the 36.1% they currently hold in Acacia today.

    -   It follows that any potential upside from a resolution of disputes with the GoT would accrue 98.73% to Barrick’s existing shareholders, and Acacia’s Minority Shareholders in aggregate would share in only 1.27% of the upside.

    -   On this basis, Acacia considers Barrick’s assertion that the Minority Shareholders will share in the upside to be overstated.

The Company notes that certain of Barrick’s statements in the Barrick Announcement are in the Company’s opinion inconsistent with public comments from senior Barrick representatives prior to the Proposal regarding the inherent value and potential of the Company’s assets.

Rebuttal of Barrick’s View on Acacia’s Mine Plans

In the Barrick Announcement, it was suggested that certain adjustments should be made to Acacia’s life of mine plans to reflect significant risks inherent in Acacia’s operations. The Company strongly disagrees with these views and is unclear on how Barrick can substantiate its proposed adjustments. The Company notes that it hosted Barrick representatives for brief site visits during Q1 2019, totalling seven days across three mines, and provided Barrick with the Company’s draft life of mine plans, in each case to facilitate discussions by Barrick with the GoT, rather than for due diligence for the Proposal.

The Company’s most current life of mine plans have been developed over twelve months by an experienced project team, comprising consultants and technical experts with prior experience at both Bulyanhulu and North Mara who have direct knowledge and a practical understanding of the geology of the ore bodies and the bottlenecks and challenges historically faced by those mining operations.

The Independent Directors, made up of a number of highly experienced mining executives and non-executives alike, also remain confident with the life of mine plans.

The industry standard methodology adopted in formulating these life of mine plans has been supported by Barrick as part of the Company’s discussions with third parties regarding potential M&A opportunities through the course of the Company’s independent existence and as Barrick has looked to dispose of its interest in Acacia.

During various such discussions, Barrick engaged its technical team, which comprised of several Qualified Persons (as defined in NI 43-101) (“Barrick’s Technical Team”), to provide technical input on the life of mine plans. This involved Barrick’s Technical Team visiting the sites, reviewing the operations and identifying potential value upsides.

The approach and assumptions adopted by Barrick in forming its most recent view on the valuation of Acacia, which underpins its Proposal, appears inconsistent with the valuation methodology used previously when seeking to dispose of its interest in Acacia.

Through Q4 2018 and 2019, prior to and independent of the Proposal, Acacia engaged SRK, an independent technical consultant, to carry out a comprehensive review of its geological and resource modelling and preparation of its life of mine plans and Mineral Resource and Mineral Reserve statements. SRK’s comprehensive review and its advice to the Board concluded that the Company’s geological and resource modelling and processes which were used in formulating its life of mine plans and Mineral Resource and Mineral Reserve statements were robust.

In response to Barrick’s comments on Acacia’s life of mine plans, the Company has provided further detail below in support of its view regarding the life of mine plans.

Bulyanhulu

In 2018, Acacia announced preliminary results from an Optimisation Study at Bulyanhulu (the “Optimisation Study”), carried out in conjunction with a comprehensive review of the geological and resource models. The study recommended a revised life of mine plan once underground mining operations resume, focusing on the Deep West area in Reef 1, which is higher grade and more continuous, supporting higher margins.

The Optimisation Study plan has been designed to reduce development requirements in terms of waste to ore tonnes ratio and to ensure there is no significant risk on the processing plant allowing for a throughput of approximately 1 Mtpa. In addition, the Optimisation Study included developed plans for achieving significant improvements in efficiency which are expected to have a positive impact on unit costs. These efficiencies include: improvements from continuous paste pouring and paste barricade redesign, removing cable bolting from stope cycles and improvement in movement of underground personnel during stope cycles.

Resource uncertainty

As part of the process of preparing the revised mine plan following the Optimisation Study, the Company adopted a more conservative approach to its resource and reserve classification, and downgraded significant parts of its Indicated Mineral Resources to the Inferred category. Both the Company and SRK believe the resource estimate is classified appropriately and that this reclassification appropriately reflects the relatively wide spaced data for the Deep West zone of the orebody. The Optimisation Study plan now includes only 3.1 Moz of the total 5.7 Moz of declared underground Inferred Mineral Resources as at 31 December 2018.

As a result, the Company strongly disagrees with Barrick’s comments regarding the conversion and dilution rates of Inferred Mineral Resources at Deep West, which it considers punitive and unjustified. In particular, the 50% conversion rate for the Deep West Inferred Mineral Resources, assumed by Barrick, is not consistent with the 96.5% reconciliation factor of gold mined versus the historical Mineral Resource Model over the life of mine (“LOM”) to date, while the 20% dilution rate assumed by Barrick is significantly higher than the average long hole dilution of 11% achieved during 2016 – 2017 and assumed in the LOM.

The Company remains highly confident in its ability to convert further Inferred Mineral Resources into Mineral Reserves through additional infill drilling and ultimately reclassification, and to minimise dilution to rates in line with its consistent operational performance at Bulyanhulu.

Grade continuity

Barrick has raised concerns over the uplift in grade continuity in the Deep West orebody and the insufficiency of drill data to support this assumption, which resulted in Barrick reducing their forecast LOM grade for Bulyanhulu to 8.6 g/t, in line with what they claimed was historically achieved at the upper zone.

The Company’s view is that the resource grade included in Acacia’s life of mine plan is unbiased and is a direct reflection of the extensive drill data, which indicates there is a mix of high and low grade areas across the orebody, as would normally be expected in mineralisation of this type and is the Company’s historical experience at Bulyanhulu. It is therefore unreasonable to ignore the available drill data and assume that the grade achieved historically at the upper zone previously mined is reflective of the entire orebody, contrary to the actual drilling data for the Deep West zone. The Optimisation Study plan is focused on mining only the higher grade zones of the deposit. It is also unreasonable to entirely ignore the drill data on the basis that the corresponding drill core samples are not now available for Barrick’s review.

To date an average grade of 9.98g/t gold has been achieved at Bulyanhulu, which includes all the lower grade areas already mined. This remains significantly higher than the adjusted LOM grade of 8.6g/t gold assumed by Barrick.

The declared Underground Reserve and Resource grade of 10.61 g/t gold (as of 31 December 2018) is also 23% higher than the LOM grade of 8.6 g/t assumed by Barrick.

Further, SRK’s independent assessment of the Company’s life of mine plans has included a comprehensive review of the Optimisation Study and provides firm support for the integrity of the Inferred Mineral Resource estimate and grade continuity assumed by the Company.

Throughput rates

The throughput rates included in the Optimisation Study plan are considered reasonable by the Company and are supported by actual historical operational performance, including the record yearly throughput of 1.1 Mt and average production of 960 ktpa for 2015 and 2016. The steady state production for the LOM is 1,030 ktpa which is only 7% higher than the production levels most recently achieved. The average depth of mining over the LOM is 1.3 km, significantly shallower than the depths noted by Barrick, with the deepest point reaching only 2.3 km.

In the Barrick Announcement, Barrick suggested that potential trucking bottlenecks could be a risk for throughput levels achieved during underground mining at deeper levels.

The Company strongly disagrees with this view. The assumptions included in the Optimisation Study plan are based on the data and conclusions of a thorough haulage simulation conducted by Labrecque Technologies which supports the sustainability of current and future expected throughput rates. The results from this simulation study indicated a material movement capacity of 1.8 Mtpa. However, the expected average material movement over the LOM is only 1.2 Mtpa, peaking at 1.6 Mtpa in 2029 and exceeding ranging from 1.5Mtpa to this maximum only from 2026 to 2030.

Production and costs

Barrick’s arguments regarding lower production and higher fixed unit costs are a direct result of the assumptions made by Barrick regarding resource uncertainty, grade continuity and throughput rates. As explained above, it is unclear to the Company how these assumptions have been substantiated by Barrick, and they are inconsistent with the extensive work and the results of the Optimisation Study.

Capital expenditures

The Company strongly disagrees with Barrick’s statements regarding upfront capital spend being understated. The Pre-feasibility and Feasibility Study level engineering undertaken at Bulyanhulu support 88% of the Company’s future expected capital spend and the remaining 12% is supported by Scoping level studies. Capital costs already include an allowance for both the achievable infill surface drilling and underground grade control drilling required for the life of mine plan. Barrick provides little detail, but appears to include costs related to further additional extensional drilling to increase the mine life production profile, but strangely without reflecting any of the associated potential production upside in its conclusions regarding Bulyanhulu.

North Mara

Grade of the Inferred Mineral Resource

Acacia’s reported LOM grade for North Mara is based directly on results from the current level of drilling at the mining operations. In the Company’s view, there is no justification for Barrick’s downward adjustment in the Inferred grade from 6.8 g/t Au to 5.6 g/t Au. The higher grade of the Inferred material reported by Acacia is an accurate reflection of the higher grade drill hole intersections obtained in the Inferred area. As already commented, it is to be expected that grades will vary within a single orebody, and that is Acacia’s experience at North Mara.

Underground mining costs

It is unclear to the Company how Barrick has substantiated an assumed future increase in the all-in sustaining cost (“AISC”) [vi] from that reported by the Company in 2018.

Acacia’s cost assumptions for North Mara are supported by historical performance, with the mine achieving an AISC of US$866/oz in 2018. The AISC as forecast by Acacia and planned in the life of mine plan is expected to fall further, as a result of increasing gold production volumes, driven by new mining fronts that are sequenced for greater efficiency. 

Capital expenditures

Barrick has assumed US$385 million in near-term capital costs at North Mara, 25% higher than Acacia’s forecast of US$308 million. Whilst the Acacia mine plan includes the construction of a new fit for purpose cemented aggregate fill plant at North Mara to service the mining requirements of Gokona underground, Barrick assumes a new paste plant at North Mara without any upside to the operating costs as well as additional capital expenditure for a new Tailings Storage Facility and water management, despite Acacia already including US$37 million over the full life of mine plan.

Other considerations

Based on recent interactions with Barrick, which Acacia understands to form the basis of Barrick’s current Proposal, it appears that Barrick has not attributed any value to the items listed below.

Assets outside of Tanzania

Barrick’s current Proposal appears to give no consideration to Acacia’s exploration assets located outside of Tanzania.

These include the following:

·   The Liranda Project in Kenya - a high-grade exploration property (resource 1.2 Mozs at 12.6 g/t Au),

·   Five exploration permits covering 191 km² in Mali along the Senegal-Mali Shear Zone, and;

·   Three joint venture projects covering ~1,800 km² of the Houndé Belt in Burkina Faso.

Additionally, Acacia is in the process of closing the South Houndé and Nyanzaga sales transactions that, based on the current offers, are expected to generate net proceeds of US$2 million and US$7 million respectively (excluding future royalties).

Pre-emption rights

Furthermore, Acacia is entitled to a right of pre-emption over certain investments in Africa as a result of the Relationship Agreement entered into between Acacia and Barrick at the time of the Company’s initial public offering. The Company notes that Barrick, in the context of its merger with Randgold Resources Limited, has publicly stated that this presents a strategic risk to Barrick, but the Company considers that the upside to Barrick of removing this risk has not been appropriately considered in Barrick’s valuation. 

Consideration of Events Leading up to the Proposal

For the benefit of all stakeholders, and to provide further context to certain statements made in the Barrick Announcement, it is important to note the following in regards to the engagement between Acacia, Barrick and the GoT since the implementation of the gold/copper concentrate export ban from Tanzania on 3 March 2017.

·   Acacia did not request that Barrick negotiate with the GoT, nor did Barrick seek consent of Acacia prior to its engagement with the GoT in June 2017. Indeed, Acacia was continuing its own engagements with the highest levels of the GoT at the time and had no reason to believe that these engagements would not continue.

·   It was only once the GoT announced in a joint press conference with Barrick that Acacia would be excluded from further direct negotiations between the GoT and Barrick, that the Independent Directors decided that supporting Barrick's discussions with the GoT was the most pragmatic way to progress the possibility of settlement.

·   The framework documents which were signed by Barrick and the GoT on 19 October 2017 locked in the proposed value transfer to the GoT represented by a US$300 million upfront payment obligation and subsequent undefined 50/50 revenue sharing. On 22 August 2017, Barrick informed the Independent Directors that it had already proposed such a 50/50 revenue sharing split to the GoT and subsequently, on 16 October 2017, provided management and the Independent Directors with a more detailed, but still high level, account of the proposed framework terms of settlement. However, Acacia was given no meaningful opportunity to respond to Barrick’s proposal to the GoT or the proposed framework, before Barrick and the GoT signed the framework documents on 19 October 2017. Barrick did not show drafts of the framework documents, nor did Barrick inform Acacia of any changes to the proposed terms, in advance of their being signed. Whilst Acacia did not consent to or approve the framework documents, Barrick now seeks to use them as part of the basis for a diminished valuation of Acacia's assets.

·   Acacia is of the view, as first expressed to Barrick in June 2017, that Barrick's intervention with the GoT has undermined the position of Acacia in Tanzania. Additionally, in the Company’s view, Barrick’s continued delay in reaching an agreement on the implementation of the terms of the framework documents agreed by Barrick with the GoT, and in particular the development of a perception that Acacia has been the roadblock to the GoT receiving some or all of the upfront payment of US$300 million agreed by Barrick, despite Barrick never having actually presented Acacia with a complete proposal for Acacia's consideration and shareholder approval, has been a key contributor to a material deterioration of Acacia's operating position in Tanzania over the last two years.

Throughout more than two years of direct negotiations between Barrick and the GoT, the Company has continuously kept the market updated as to the operational developments in Tanzania whilst focusing on continuing to operate our assets, by controlling what we can control.

Whilst Barrick has noted that Acacia’s operating environment is “increasingly challenging”, the examples contained within the Barrick Announcement pertain to an operating environment Acacia has been operating under for the last two years or more as disclosed to the market. The Company would like to note the following in direct response to Barrick’s statements within the Barrick Announcement:

·   Export ban: The export ban was implemented on 3 March 2017. This was over two years ago and has been an unfortunate, yet constant reality of the operating environment in Tanzania since then. This does not reflect a recent increase in the difficulties faced by the Company.

·   Bulyanhulu reduced operations: As a direct result of the export ban, shortly thereafter on 4 September 2017, following a short period of running the Bulyanhulu mine at great cost given no revenue was being received from concentrate due to the export ban, operational activity at Bulyanhulu was reduced to tailings retreatment. Once again, this does not represent a recent increase in the operational difficulties faced by the Company.

·   Environmental issues: Whilst Acacia acknowledges the potential threat of additional environmental enforcement action against the Company’s businesses, Acacia also notes that the mines have faced a series of environmental issues since pre-2010 at which time the business was wholly-owned by Barrick. As such, once more, Acacia does not consider this a new development, but rather an ongoing business risk that is receiving the appropriate attention by Acacia management.

In response to Barrick’s statements regarding the ability of Acacia to continue to operate in the challenging operating environment in Tanzania, we highlight below some of the Company’s achievements since the export ban and subsequent reduction of operations at Bulyanhulu:

·   Operations continue to perform: For the year ended 31 December 2018 Acacia produced 521,980 ounces of gold from its combined operations in Tanzania, substantially ahead of the initial production guidance for the year of 435,000 to 475,000 ounces. Whilst the Q1 2019 results were impacted by unanticipated factors, the Company has seen a rebound in gold production and performance in Q2 2019 and remains on track to deliver against its full year production guidance of 500,000 to 550,000 ounces.

·   Acacia has implemented a number of operational improvements: Throughout the period, the Company has continued to pursue a number of initiatives to continue to develop and improve its operating assets, as highlighted by its significant achievements at North Mara including:

    -   Production increased from 72,011 ounces in Q3 2017 to 84,078 ounces in Q4 2018, demonstrating the resilience of Acacia’s business.

    -   Over the same period, AISC reduced from US$864/oz to US$851/oz in nominal terms, demonstrating Acacia’s ability to optimize its business and control its costs.

Notwithstanding the above, Acacia has noted the recent letter from the Acting Chairman of the GoT negotiating team, dated 19 May 2019 and hand-delivered to Acacia by Barrick on 21 May 2019, addressed to Acacia’s three operating companies[vii]. This letter stated that the GoT is resolved that it will not execute final agreements for the resolution of the Company’s disputes if Acacia is one of the counterparties to the agreements and that it will only sign such agreements “if satisfied that substantial changes have been made to the management style of the Operating Companies and of their shareholders". Acacia acknowledges that this potentially represents a material development in respect of Acacia’s status with the GoT, and accordingly has been seeking engagement with the GoT to confirm their position. To date, Acacia has yet to receive confirmation from the GoT. However, the Company remains concerned that unless a resolution is achieved in the near term, the Company’s Tanzanian assets face further risks to their ongoing operations and ability to deliver against their plans.

Considerations Regarding Acacia’s Strategic Alternatives

The Transaction Committee continues to evaluate the terms of the Proposal and the strategic alternatives available to the Company in the absence of a transaction with Barrick. Barrick acquiring the remaining shares in Acacia it does not currently own would be an attractive solution for all key stakeholders subject to an offer price which is fair and which commands the requisite support of shareholders.

In the absence of a recommendable offer from Barrick, Acacia’s preferred outcome is to continue to seek a negotiated settlement with the GoT (however negotiated), which would allow for the lifting of the export ban and resumption of full operations at Bulyanhulu, whilst continuing to operate at North Mara and Buzwagi in the ordinary course, and continuing to demonstrate its long-term commitment to Tanzania, its people and the mining industry going forward. Acacia remains hopeful of an amicable resolution to all disputes in the near-term.

In the absence of a negotiated settlement to date, only as a fall-back, the Independent Directors of Acacia have sought to continue to protect the Company’s business through the contractual arbitration proceedings commenced in July 2017 by Bulyanhulu Gold Mine Limited (“BGML”), the owner of Bulyanhulu, and Pangea Minerals Limited (“PML”), the owner of Buzwagi.The Transaction Committee notes, however, that there are also significant collateral risks in PML and BGML continuing to seek to protect their businesses through maintaining the arbitrations pending a negotiated resolution.

Notes

Terms not defined herein have the meaning as set out in Acacia’s announcement dated 18 June 2019. This announcement is being made without the consent or approval of Barrick.

ENQUIRIES

For further information, please visit our website: www.acaciamining.com or contact:

Acacia Mining plc                                                                                                                            +44 (0) 20 7129 7150

Sally Marshak, Head of Investor Relations and Communications                                               +44 (0) 752 580 7953  

Camarco                                                                                                                                              +44 (0) 20 3757 4980

Gordon Poole / Nick Hennis

J.P. Morgan Cazenove (Joint Lead Financial Adviser and Broker):                             +44 (0) 20 7742 4000

Barry Weir

James Robinson

Dimitri Reading-Picopoulos

RBC Capital Markets (Joint Lead Financial Adviser and Broker):                                                 +44 (0) 20 7653 4000

Kevin Smith

Paul Betts

Vicky Liu

Lazard & Co., Limited (Financial Adviser to the Transaction Committee of Acacia Mining plc):

Spiro Youakim                                                                                                                                   +44 (0) 20 7187 2000

William Lawes

Gustavo Plenge

Further Information:

J.P. Morgan Limited, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised and regulated in the United Kingdom by the Financial Conduct Authority. J.P. Morgan Cazenove is acting as financial adviser exclusively for Acacia and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Acacia for providing the protections afforded to clients of J.P. Morgan Cazenove, nor for providing advice in relation to any matter referred to herein.

RBC Europe Limited (trading as RBC Capital Markets), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting for Acacia and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than Acacia for providing the protections afforded to clients of RBC Capital Markets, or for providing advice in connection with the matters referred to in this announcement.

Lazard & Co., Limited (“Lazard”), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Transaction Committee of Acacia Mining plc and for no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than the Transaction Committee of Acacia Mining plc for providing the protections afforded to clients of Lazard nor for providing advice in relation to the matters referred to in this announcement. Neither Lazard nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Lazard in connection with this announcement, any statement contained herein or otherwise.

About ACACIA

Acacia Mining plc (LSE:ACA) is the UK holding company of the Acacia Group, Tanzania’s largest gold miner and one of the largest producers of gold in Africa. The Acacia Group has three mines, all located in north-west Tanzania: Bulyanhulu, which is owned and operated by Bulyanhulu Gold Mine Limited, Buzwagi, which is owned and operated by Pangea Minerals Limited and North Mara, which is owned and operated by North Mara Gold Mine Limited. The Acacia Group also has a portfolio of exploration projects in Kenya, Burkina Faso and Mali. Acacia Mining plc is a UK public company headquartered in London. It is listed on the Main Market of the London Stock Exchange with a secondary listing on the Dar es Salaam Stock Exchange. Barrick Gold Corporation is the majority shareholder of Acacia Mining plc.

[i] Barrick’s indicative proposal dated 21 May 2019 to acquire all of the shares it does not already own in Acacia through a share for share exchange of 0.153 Barrick shares for each ordinary share of Acacia (the “Proposal”)

[ii] Based on the exchange ratio in the Proposal of 0.153x, the closing price of Barrick shares on the New York Stock Exchange on 20 May 2019, and the exchange rate of US$/£0.78 at 4:00p.m. GMT closing mid spot rates on 20 May 2019, compared to the market closing price of Acacia stock on 20 May 2019. Source: FactSet

[iii] Based on the variations of the London PM fixing of Gold commodity price and FTSE Gold Mines index between 20 May 2019 (the last trading day before announcement of the Proposal) and 17 June 2019 (the last trading day before the Barrick Announcement). Source: FactSet 

[iv] Being the market closing price of Barrick shares on the New York Stock Exchange on 17 June 2019 multiplied by the exchange ratio of 0.153x divided by the Acacia market closing price at 20 May 2019 inflated by 15% in line with FTSE Gold Mines index performance over the period 20 May 2019 to 17 June 2019. Source: FactSet 

[v] Based on the aggregate value of Minority Shareholders’ interest in Acacia at the market close price of Acacia on 17 June 2019, divided by the pro forma market capitalisation of Barrick post-transaction (based on the Barrick market capitalisation on 17 June 2019 plus the aggregate value of Minority Shareholders’ interests on 17 June 2019) at the market close price of the respective companies on 17 June 2019. Source: FactSet

[vi] Calculated by taking cash cost per ounce sold and adding corporate administration costs, share-based payments, reclamation and remediation costs for operating mines, corporate social responsibility expenses, mine exploration and study costs, realised gains and/or losses on operating hedges, capitalised stripping and underground development costs and sustaining capital expenditure. This is then divided by the total ounces sold. The measure is in accordance with the World Gold Council’s guidance issued in June 2013.

[vii] Bulyanhulu Gold Mine Limited, North Mara Gold Mine Limited and Pangea Minerals Limited