Driving Operational Excellence…

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Driving Operational Excellence… Annual Report & Accounts 2013 STRATEGIC REPORT STRATEGIC Driving operational excellence… Annual Report and Accounts 2013 3 STRATEGIC REPORT Group at a glance 1 … through a sharper focus Chairman’s statement 2 Chief Executive Of!cer’s report 4 on asset optimisation Strategy and business model 6 Year in review 8 Operational Review 10 & tighter control of Senior leadership 12 Outlook 13 costs we are creating Key performance indicators 14 Operating review 16 Exploration review 22 a stronger business Financial review 25 Corporate responsibility 34 GOVERNANCE Forward-looking statements Letter from the Chairman 38 This Annual Report includes “forward-looking statements” that express or imply expectations of future events or results. Forward-looking statements are statements that Board of Directors 39 are not historical facts. These statements include, without limitation, !nancial projections Senior management 42 and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future production, operations, costs, projects, and Corporate governance report 44 statements regarding future performance. Forward-looking statements are generally Committee reports 49 identi!ed by the words “plans,” “expects,” “anticipates,” “believes,” “intends,” “estimates” and other similar expressions. All forward-looking statements involve a Remuneration report 56 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 DIRECTORS’ REPORT expressed in, or implied by, the forward-looking statements contained in this Annual Report. Factors that could cause or contribute to differences between the actual results, Risk management 76 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 Other statutory information 84 or regulation in countries in which ABG conducts – or may in the future conduct – Directors’ responsibilities statement 89 business, industry trends, competition, "uctuations in the spot and forward price of gold or certain other commodity prices (such as copper and diesel), currency "uctuations Reserves and resources 90 (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 FINANCIAL STATEMENTS 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 Independent auditors’ report on the mineral reserves successfully and in a timely manner, ABG’s ability to complete land consolidated !nancial statements 95 acquisitions required to support its mining activities, operational or technical dif!culties which may occur in the context of mining activities, delays and technical challenges Consolidated !nancial statements 98 associated with the completion of projects, risk of trespass, theft and vandalism, Notes to the consolidated changes in ABG’s business strategy including, ABG’s further implementation of the !nancial statements 103 Operational Review and related cost control and strategic measures, as well as risks and hazards associated with the business of mineral exploration, development, mining and Independent auditors’ report on production and risks and factors affecting the gold mining industry in general. Although the parent company !nancial statements 145 ABG’s management believes that the expectations re"ected in such forward-looking statements are reasonable, ABG cannot give assurances that such statements will prove Parent company !nancial statements 147 to be correct. Accordingly, investors should not place reliance on forward-looking Notes to the parent company statements contained in this Annual Report. Any forward-looking statements in this Annual Report only re"ect information available at the time of preparation. Subject to the !nancial statements 151 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 SHAREHOLDER INFORMATION revise any forward-looking statements in this Annual Report, whether as a result of new information, future events or otherwise. Nothing in this Annual Report should be Glossary of terms 162 construed as a pro!t forecast or estimate and no statement made should be interpreted Shareholder enquiries 168 to mean that ABG’s pro!ts or earnings per share for any future period will necessarily match or exceed the historical published pro!ts or earnings per share of ABG. KEY FOR MORE INFORMATION More within this report More information online Case study MORE INFORMATION AVAILABLE AT Cover photo: Process plant, Bulyanhulu WWW.AFRICANBARRICKGOLD.COM GROUP AT A GLANCE Who we are REPORT STRATEGIC African Barrick Gold (“ABG”) is Tanzania’s largest gold producer and one of the largest gold producers in Africa. We have three operating mines, all located in Northwest Tanzania, and several exploration projects at various stages of development in Tanzania and Kenya. ABG is a UK public company with its corporate African Barrick Gold is listed on the Main Market of headquarters in London. In addition to our corporate the London Stock Exchange under the symbol ABG headquarters, we also have of!ces in Dar es Salaam, and has a secondary listing on the Dar es Salaam Tanzania and Johannesburg, South Africa to provide Stock Exchange. in-country and regional support for our operations. For further information please visit our corporate website at www.africanbarrickgold.com OUR PRODUCING MINES We have been operating in Tanzania for over a decade and during that time have produced over 7 million ounces of gold from our combination of open pit and underground mines. All of our mines are located in the Lake Victoria Greenstone Belt, one of the most prospective areas for gold mining in Africa. Bulyanhulu • A high-grade underground mine with shaft access, which is transitioning to long-hole and drift and !ll as its principal Kampala mining methods West Kenya JV • Life of mine is estimated to be over 25 years, based on Kisumu proven and probable gold reserves of 9.4 million ounces UGANDA Buzwagi KENYA • A low-grade bulk deposit with a single large open pit Lake Victoria • Life of mine is estimated to be 5 years, based on proven North Mara Nairobi and probable gold reserves of 1.1 million ounces North Mara • A high-grade open pit mine, with future underground potential, Mwanza consisting of three open pit deposits, Nyabirama, Gokona Nyanzaga and Nyabigena Bulyanhulu TANZANIA • Life of mine is estimated to be 10 years based on proven and Golden Ridge Arusha probable gold reserves of 2.2 million ounces Buzwagi Producing operations For further information on our operating mines Exploration assets please turn to pages 16-21 Annual Report and Accounts 2013 1 CHAIRMAN’S STATEMENT A continued focus: Driving operational excellence Kelvin Dushnisky, Chairman of the Board Dear Shareholders, ef!ciency, cost control and drive sustainable returns for our investors. With this in mind, the Board established 2013 was a challenging year for the gold the following priorities for the year: meeting cost industry, in which we experienced an annual reduction targets established in the Operational Review; strengthening our Board and management team; and driving decline in the gold price for the !rst time in focus on operational excellence. I am pleased to report we thirteen years. African Barrick Gold was have made solid progress in all of these areas. ahead of many of its peers in adapting to this Improvements in operational performance situation, having initiated a comprehensive We exceeded the top of our 2013 production guidance range Operational Review in January, before of 600,000 ounces of gold, producing 641,931 ounces, and accomplished this at a cash cost of US$827 per ounce, the signi!cant fall in the gold price. As a 12% below the bottom of our cost guidance range. result, we were able to respond quickly and As part of an industry-wide initiative driven by the World decisively to reshape the business and ensure Gold Council, we began reporting our All-in Sustaining Costs ABG is well positioned to thrive in any gold (“AISC”) in 2013. This provides a standardised metric and a price environment. more robust measure of the true cost of producing an ounce of gold. We are pleased to report a 14% year on year When I became Chairman in February 2013, I accepted the decrease in our per ounce AISC. I am also pleased to note position with great enthusiasm. I was well aware of the that our AISC declined in each successive quarter of 2013, challenges facing the business, but also of the quality with fourth quarter AISC being US$1,171 per ounce. In of the asset base and the potential for the Company to addition, we exceeded our cost savings target by delivering improve. Our Operational Review was central to our US$129 million of savings by the end of 2013, with a activities in 2013 and re-examined every aspect of our further US$56 million of savings due in 2014. business. Our objectives were to improve operating 2 www.africanbarrickgold.com I fully anticipate that the operational improvement KEY PRIORITIES FOR 2013 REPORT STRATEGIC measures being implemented by the ABG management team will make a signi!cant contribution to improved performance throughout 2014 and beyond. Ensure Delivery on the Corporate governance Operational Review In 2013 we welcomed four new independent Directors to the Board. Peter Tomsett, Graham Clow, Rachel English and Steve Lucas joined as independent Non-Executive Directors, with Peter assuming the role of Senior Independent Director. Strengthen the Leadership of the Company Peter and Graham are seasoned mining executives with wide-ranging experience in technical and operational mining matters across all aspects of the industry. Rachel and Steve are experienced !nance executives who both have Drive Focus on held a variety of senior positions in the extractives sector.
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