Name and Location
Gokona underground gold mine project, Tanzania.

Client
Acacia Mining (formerly African Barrick Gold).

Project Description
Acacia has approved the definitive feasibility study (DFS) on the development of an underground operation at the Gokona pit, at North Mara. The DFS confirms an attractive return for the company at current reserve pricing. The project has proven and probable reserves of 1.99-million tonnes grading 8.07 g/t of gold.

The project will use the ongoing exploration decline in the Gokona pit. The mine will have two major declines within the mine plan – one portal will access the Eastern material and the other mineralisation at the western end of the pit. The eastern decline is being developed as an exploration portal.

Development, and subsequently mining, will initially proceed using a specialist mining contractor Byrnecut which is already operating at North Mara as the exploration portal development contractor.

Under the DFS, Acacia will buy the equipment required for the project, but the company is exploring the option of sourcing equipment from redundant Acacia operations and/or hiring equipment.

Longhole open stoping with cemented aggregate fill will be used – a well-known mining method that has limited technical complexity. Byrnecut is expected to be the mining contractor for at least the initial three years, further reducing technical risk. It is expected that material from the Gokona mine will be blended with the lower-grade ore from the Nyabirama openpit to fill the process plant at North Mara, which has a nameplate capacity of 2.8-million tonnes a year. The high-grade material from Gokona will be preferentially treated and will not be stockpiled. Recoveries of the underground material are estimated at 88%, which, when combined with the lower-grade Nyabirama material, will lead to recoveries of between 85% and 87% for the mine as a whole.

The underground project is expected to produce 450 000 oz over a five-year life-of-mine (LoM), with all-in sustaining costs of under $750/oz.

Further upside exists beyond the initial LoM, with potential for lateral extensions, and the mineralisation remaining open beneath the 300 m vertical depth cutoff used in the DFS.

The DFS considered only mineralisation above 990RL (or 300 m vertical depth). Historical drilling shows that mineralisation extends down to 900 m vertical depth and inferred resources are estimated at 761 000 oz at a grade of 7.66 g/t beneath 990RL. It is expected that, as the exploration portal and the underground mine progress, there will be increased access to drilling locations to potentially upgrade inferred ounces to extend the LoM beyond five years.

Net Present Value/Internal Rate of Return
The DFS shows that the project can deliver a post-tax net present value, at a 5% discount rate, of $161-million, with a payback of 1.6 years.

Value
The project will require total preproduction capital expenditure of $37-million, including the cost of the exploration decline.

Duration
Not stated.

Latest Developments
Acacia received the required approvals to start mining at the Gokona project in May 2015.

The project is expected to continue the ramp-up of the project over the remainder of 2015.

Key Contracts and Suppliers
Byrnecut (specialist mining contractor).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Acacia Mining investor relations manager Giles Blackham, tel +44 20 7129 7150 or email gblackham@acaciamining.com.