MACIG Connect Series
Acacia is optimising its productive gold assets to develop cash flow but is also committed to exploration in both Tanzania and Kenya.
Could you provide a brief overview of Acacia’s East Africa focus in relation to the company’s wider operations?
East Africa, and specifically Tanzania, is the core of our business. We have been active in Tanzania for over 15 years and have three operating mines there; Bulyanhulu, North Mara and Buzwagi. Together, these three mines are expected to produce over 800,000 oz of gold in 2016. In recent years we have also expanded our exploration focus into Kenya, with a project sited on the same greenstone belt as is prevalent in northern Tanzania.
What are the most recent developments and prospects for Acacia’s North Mara and Bulyanhulu operations in Tanzania?
Over the past few years we have made substantial changes to both North Mara and Bulyanhulu and are seeing the results now. At North Mara we took one of the two open pits, Gokona, underground and this is now in full production and operating well ahead of expectations. This decision made sense technically, but also socially as it reduces the future footprint of the mine.
At Bulyanhulu, we have fully mechanized what was a conventional mine set up in the same manner as many of the South African mines, when the geology didn’t require it. This has dramatically improved productivity and, together with the changes we are making there, we expect 2016 to be the highest production year for almost 10 years and are looking for further growth as we move into 2017 and 2018.
Could you provide some further insight into Acacia’s involvement in the Nyanzaga project with OreCorp Limited?
In 2015, Acacia decided to put the Nyanzaga project into a joint venture with OreCorp as it was seen as a non-core project due to our focus being on optimizing our existing mines. The joint venture was an opportunity for the project to be progressed by a dedicated team, with previous experience in Tanzania, whilst allowing Acacia the opportunity to maintain exposure to the asset. To date, the OreCorp team has done an excellent job and has successfully completed a positive scoping study for the project, which is driving value for each of the JV partners. Dependent on the outcome of a feasibility study expected to be completed in 2017, Acacia will have the option to retain 75% of the project or to dilute to 50% ownership.
How have Acacia’s Kenya exploration activities developed since the acquisition of Aviva Mining Kenya?
Since acquiring the project in late 2012, we have advanced an extensive grassroots exploration program, designed to understand the entirety of the 1,600 square kilometre project area. This took the form of soil sampling, auger and air core drilling, mapping, IP surveys amongst others. As a result of this, we identified at least 20 targets for follow up, and have begun to drill test a number of these.
As part of the drill testing we identified the Liranda Corridor, near Kakamega, which has become the focus of our activities as we believe we have discovered and confirmed three shoots of high grade gold mineralization along a 9 km corridor, with a further 4 prospects still to thoroughly test. We are in the process of completing a 40,000 m diamond core drilling programme with six rigs active on the Liranda Corridor project, with the aim of delineating an initial resource in Q1 2017.
Following better-than-expected earnings in Tanzania, what is your perception of the country as an investment opportunity?
Following the October 2015 elections, the new Tanzanian Government has focused on reducing corruption, wasteful spending and reliance on foreign aid with the aim of self-funding the national budget and we are supportive of their approach.
An important aspect for any investor is a country’s fiscal regime. What are your thoughts on Tanzania’s?
The most important thing about any fiscal regime is the stability of it, and in Tanzania it has been pleasing to see such stability. The Mining Act in 2010 proscribed for a 4% royalty and 30% corporate tax rate which is competitive within the Africa continent.
How does Kenya’s investment climate and business environment compare?
Kenya is a new destination for mining and the Mining Act has only just been passed so there is some way to go before we have a definitive view on the investment climate for mining. We are encouraged by the progress to date, but in order for the mining industry to be developed it is key that the regulatory environment for likes of permitting, tax, royalties and employment is stable and practical to ensure that all of our stakeholders benefit from the investments.
What are Acacia’s key objectives with regard to existing operations and further exploration?
We are focused on continuing to optimize our portfolio of producing assets to increase the cash flow generation from our business in order for all of our stakeholders to benefit. We will be disciplined in how we allocate this capital, but will continue to invest in exploration as we believe this is a key driver of value.