9th Dec 2011 07:00
9th December 2011
African Barrick Gold plc (the "Company" or "ABG") Update on the Tanzanian Grid Power Situation
ABG announces that it has completed the full implementation of additional diesel generated back-up power at its Buzwagi mine, providing full back-up power in the event of disruptions to grid electricity supply. As previously reported, there have been significant and continual power disruptions throughout Tanzania during 2011, significantly reducing the expected levels of power supply.
The installed generating capacity in Tanzania amounts to approximately 1,000 MW, of which close to 50% is generated by hydropower. As a result of the broader drought conditions experienced in East Africa this year, the availability of this hydropower has been severely limited, placing significant strain on the network and leading to regular power outages. This has been exacerbated by maintenance work on the transmission network as well as on gas pipelines feeding the network.
The majority of the impact to ABG has been experienced at Buzwagi, as a result of its reliance on grid power. As reported in our interim results, in response to this situation we invested in a first phase of 5 MW of back-up power installed in July, followed by a second phase of 16 MW which has been commissioned over the last week and which now provides full back-up power for the site. In response to the high level of power disruptions experienced through October and November we will operate this back-up power at full capacity throughout December as part of the commissioning process.
At our other mines, Tulawaka draws its power entirely from diesel generators, North Mara has full diesel back-up, although some refurbishment work on its generators is underway, and at Bulyanhulu we have around 85% back-up coverage which will move to 100% by the end of Q2 2012.
Overall, during 2011 we estimate that the impact to ABG production from power related issues will amount to 35-40,000 ounces of gold as a result of plant down time and additional maintenance shutdowns due to excessive wear on critical mechanical components. The majority of this impact has been at Buzwagi, including the loss of production from the SAG mill motor failure there during Q2.
The escalation of these power related issues during Q4, with up to 5 or 6 daily outages at Buzwagi, has meant that the expected quarterly production run rate at the mine will not be achieved and as a result we are likely to fall just short of 700,000 ounces of gold production in 2011.
As we go into 2012, we will benefit from our investment in additional back-up generating capacity. We are also encouraged by the commitment from the Tanzanian government and the national utility provider TANESCO to add to the installed generating capacity as well as to improve maintenance of the existing infrastructure in the country.
ENQUIRIES
For further information contact:
African Barrick Gold plc
Andrew Wray, Head of Corporate +44 (0)207 129 7150 Development & IR Giles Blackham, Investor Relations
Manager Finsbury Charles Chichester +44 (0)207 251 3801 About African Barrick Gold
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 north west Tanzania and several exploration projects at various stages of development. With a high-quality asset base, solid growth opportunities and a clear strategy, we have the objective of increasing our existing production to one million ounces per year by 2014.
We aim to achieve this by:
* 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 license 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, also under the symbol ABG. 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.
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," "expect," "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, 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, 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 to timely and successfully 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.
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