Since Gordon’s arrival as CEO at Acacia Mining in mid-2013, the company has matured from Barrick Gold’s problem child to a role model for its bullion industry peers. The company, formerly known as African Barrick Gold, is Tanzania’s largest miner and it posted a return to free cash generation in 2014 for the first time in three years.
Barrick Gold decided in 2010 to spin off its Tanzanian assets as it struggled with rising cash costs, increasing capital requirements and social unrest around the operations, and African Barrick Gold became one of the worst-performing mid-cap stocks in the United Kingdom in 2013. But none of that deterred Gordon, who saw the Bulyanhulu and North Mara mines as two of the best assets in Africa.
“When you put great assets together with great people, good things are bound to eventually happen,” said Gordon, underplaying the complete overhaul that he and his team have started at Acacia during his short tenure. With an extensive background in mining engineering, having previously held senior positions with Intrepid Mines, DRDGold and Placer Dome, he immediately conducted a full-fledged operational review and began fixing up the company’s three major assets, addressing production, cost and social issues all in one go.
For instance, at North Mara, transitioning the Gokona open pit into an underground operation is expected to produce up to 450,000 ounces of gold in the next five years and lower the all-in sustaining cost by more than $200 per ounce – all while reducing the opportunity for illegal miners to enter the operation and using less land to dump waste rock. Similar operational improvements can be found at Bulyanhulu, where mechanized long hole stoping has replaced labour intensive conventional hand-held mining, and at Buzwagi, where shortening the mine life ensured that only profitable ores are being mined.
And while the results are tangible – Acacia posted net earnings of US$90 million, all-in sustained costs that are 18 per cent lower than the previous year, and a 13 per cent increase in gold production in 2014 – they do not reflect the true scale of the overhaul, Gordon pointed out. “The changes made are permanent ones that are only beginning to show how effective they are,” he said, noting that Bulyanhulu is expected to reduce costs far more this year than it has to date.
The rebranding of the company as Acacia Mining last November was a coming-of-age decision. “We wanted to gain some credibility, a track record of delivering, before making a symbolic change like that,” said Gordon. “It really is symbolic of a new beginning.”
The long-standing champion