14th Oct 2010 07:00
14 October 2010
African Barrick Gold plc (the "Company" or "ABG") Update on Buzwagi Mine and 2010 Production
Following recent developments at Buzwagi, ABG is providing the following operational update.
Recent developments
We have recently uncovered an organised and systematic onsite fuel theft, which has impacted production at Buzwagi. Investigations into this matter indicate that criminal fuel theft syndicates have widely infiltrated our mining department.
We have made the decision to suspend approximately 60 employees and a number of contractors, representing over 40% of the mining department, pending further disciplinary procedures. As a result, the mining of higher grade ore has been delayed and low grade stock piles are currently being processed. This has led to a reduction of approximately 10,000 ounces of production in the third quarter.
Management initially expected to recover this production over the remainder of the year. However, the time frame to bring in replacement operators was delayed. Approximately 20 operators have now been seconded from Barrick to assist in restoring the mining operations to planned levels and to train a new team of operators.
Overall, we estimate that the delay caused by this incident to the mining of higher grade ore zones in Stage 1 will reduce full year production at Buzwagi by approximately 30,000 ounces.
Ongoing operational initiatives
As outlined in our interim results statement, efforts at Buzwagi over recent months have continued to focus on the deployment of additional expertise and resources as part of the ongoing implementation of a detailed action plan aimed at reaching targeted operating metrics for the end of 2010. These efforts remain on track to achieve the budgeted production run rate by the end of the year.
Additionally, we have strengthened the senior management team with the appointment of Boyd Timler as General Manager of Buzwagi and Marco Zolezzi as COO of ABG. Boyd has 28 years of mining experience, including over 5 years as General Manager of Barrick's Plutonic and Granny Smith mines in Australia. Marco also brings a long track record of operational and technical experience with him. Over the course of the third quarter, this new management team has identified further opportunities for improvement at the mine, which are being undertaken. The implementation of these additional measures has impacted day to day operations at Buzwagi, particularly in terms of plant availability and throughput. However, we believe that these measures will have a positive long-term impact on operations, despite any short term effects that they may have.
Production outlook
The operational initiatives at Buzwagi were on track to deliver production in line with guidance stated in our interim results, albeit at the bottom end of the range of 750-800,000 ounces. As a consequence of our actions to address the fuel theft, we now anticipate production will be comparable to that of 2009, which was 716,000 ounces. Despite the short-term impact on production, these actions were necessary to maintain the integrity of the operating environment at Buzwagi. It should also be noted that the lower production levels are temporary as a result of mining the low grade stockpiles and that the total ounces expected to be produced over the life of mine remains unchanged. As such, the estimates for future years' production remain unchanged.
ENQUIRIES
For further information contact:
African Barrick Gold plc
Greg Hawkins, CEO
Andrew Wray, Head of IR & Corp Devt +44 (0)207 129 7155
Finsbury +44 (0)20 7251 3801Andrew MitchellCharles Chichester
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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