AFRICAN BARRICK GOLD PLC - Expansion of Bulyanhulu Upper East Project

See diagram

Background to the project:

Bulyanhulu is a world class high grade underground mine with reserves of 10.6Moz at a grade of 11.7g/t Au and total resources of 16.9Moz at 9.7g/t Au and in 2011 the mine produced 262koz. Production rates are currently constrained by the hoisting capacity of the shaft resulting in a mine life of over 25 years. As part of our drive to optimise our assets, ABG has been examining options to increase mining rates from Bulyanhulu to bring production more into line with the scale of the resource base.

A key part of the analysis has been the Upper East zone which is situated approximately 1.5km east of the process plant, on the eastern extension of the strike length of the mine. The zone is currently included in reserves and was scheduled to be mined later in the mine life. The Upper East was initially accessed in 2001 through a 1.8km decline from the central ramping system. Due to the low gold price environment the area was subsequently not developed. Over the past 18 months ABG has been dewatering and rehabilitating the decline as it provides an opportunity to truck ore to surface and therefore bypass the shaft constraint.

ABG initially examined the opportunity to bring forward just the ounces contained in Reef 1 (1.2Moz at 10.6 g/t Au) and have completed a feasibility study into the project, which is awaiting the completion of a test stope before being submitted for Board approval. As previously announced, we are investigating the possibility of mining Reef 2 in parallel with Reef 1, which will allow increased access to mining faces and therefore increase production rates from the zone while using the same ramp system. The incorporation of Reef 2 adds 0.9Moz at 9.7g/t Au to the project, bringing the total reserve ounces contained in the Upper East Zone project to 2.1Moz at 10.2g/t Au.

ABG has commenced work on a pre-feasibility and feasibility study to incorporate the mining of Reef 2 in parallel with Reef 1 which will utilise the shared underground infrastructure. Reef 2 is hosted in a more competent host rock and therefore it is planned to utilise lower cost mining methods already employed elsewhere at the mine, namely long hole stoping. We estimate this work will be completed by the end of Q1 2013 after which time Board approval will be sought for the whole project. In order to protect the overall timeline to first production, the Board have approved the ordering of certain long lead items to ensure that mining operations can commence once Board approval is received. All equipment ordered ahead of final Board approval can also be utilised in the existing Bulyanhulu operations. The commitment amounts to $4.3 million in 2012 and $6.5 million in 2013.

With the incorporation of Reef 2 into the project, it is now expected to be of sufficient scale to become a standalone operation and benefit from having its own dedicated infrastructure, ventilation and personnel in place.

Sensitivity Analysis:

The sensitivity analysis below highlights the returns the project offers at a
range of gold prices:

Gold price     $/oz            1,200       1,400        1,700       1,800
                                                                         
Post tax IRR     %             17.1%       24.1%        34.3%       37.7%

Desktop rescheduling of the life of mine plan has shown the ability to fully replace the Upper East ounces in the current mine plan whilst still maintaining the existing production profile and therefore the whole of the Upper East zone project provides incremental value to the mine.

Key Life of Mine Operating Metrics:

The key life of mine operating metrics are based upon a combination of the feasibility study on Reef 1 and the scoping study on Reef 2. This combination of studies in conjunction with the recently approved CIL Expansion Project gives the potential to move from 92% to 95% recoveries from the Bulyanhulu Upper East ore. The studies show a lower cash cost than current levels, given Upper East is closer to surface and will mine material with grades similar to current Bulyanhulu operating averages. The ordering of the long lead items provides the opportunity to bring forward production from 2015 to Q4 2014.

Operating Metrics                                           
                                                            
Tonnes Processed                                      6.89Mt
                                                            
Head Grade                                        9.05g/t Au
                                                            
Recovery                                                 95%
                                                            
Brought forward Ounces                               1.86Moz
                                                            
Operating Cost Per Tonne Milled                       $164.2
                                                            
Total Cash Cost Per Ounce                               $608
                                                            
Pre-production Capital                        $99 million(1)
                                                            
LOM Capital Required                         $379 million(1)

(1) Capital costs are estimated to a +/- 15% accuracy

Upper East Zone Reef 1 and Reef 2 Reserves:

See diagram

Next Steps:

We plan to implement the project in two phases. Phase One will commence immediately with the ordering of the long lead items. Following completion of the combined feasibility study and upon receipt of Board approval project development will commence in H1 2013 utilising the dewatered and rehabilitated 1.8km existing decline to provide access for development of stoping areas.

Phase Two is expected to commence in early 2014, once environmental approvals have been granted for ABG to undertake a box cut over the shallower portion of the Upper East zone. The box cut will be the location for asecond decline into the underground which will be developed in order to open up the shallower reserves on reefs 1 and 2. This box cut will allow for an additional ventilation intake, improved access to the Upper East reefs 1 and 2 and additional truck haulage ability through the new ramp system.

A drill programme is continuing on the Upper East to further test the strike extension and to look to convert additional resources into reserves. Initial results have been positive and the programme is expected to be completed by the end of 2012 with the results then being incorporated into the project.

Primary development will be contracted out to a suitably capable development contractor which will allow the primary workforce to focus on existing operations.

In tandem with the development, work will commence to increase the capacity of the front end of the process plant by 200ktpa bringing capacity to around 1.4Mtpa, ABG believes that this can be achieved with limited capital spend and no impact on operations.

Conference call details:

A conference call will be held for analysts and investors on 3 October, 10am, London time with the dial in details below. A short presentation on the Upper East zone project will be available on our website ahead of the call: www.africanbarrickgold.com

Participant dial-in numbers: +44 (0) 20 3003 2666

Password: ABG

Replay dial-in number: +44 (0) 20 8196 1998

Access pin: 8926365

ENQUIRIES

For further information contact:

African Barrick Gold plc +44 (0)20 7129 7150

Andrew Wray, Head of Corporate Development & Investor Relations

Giles Blackham, Investor Relations Manager

RLM Finsbury +44 (0)20 7251 3801

Charles Chichester

About ABG

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 northwest Tanzania, and several exploration projects at various stages of development. We have a high-quality asset base, solid growth opportunities and a clear strategy.

The key pillars to our strategy are:

  * 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 licence 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. 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. ABG reports in US dollars in accordance with IFRS as adopted by the European Union.

Forward-looking statements

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," "expects," "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.

For a breakdown of Bulyanhulu's reserves and resources, refer to the 2011 Annual Report