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African Barrick Gold (ACA)

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Monday 23 July, 2012

African Barrick Gold

Proposed Acquisition of Interests in Kenyan Lic...


AFRICAN BARRICK GOLD

23rd July 2012

               African Barrick Gold plc (the "Company" or "ABG")               

     Proposed Acquisition of Interests in Exploration Properties in Kenya      

  * Acquisition of interests in a large land package in an extensive greenstone
    belt
   
  * Under explored region with multiple styles and types of gold prospects
   
  * Numerous large gold anomalies on the project with promising initial results
   
ABG is pleased to announce that is has entered into an agreement with Aviva
Corporation Limited ("Aviva", ASX:AVA) to acquire all of the outstanding share
capital of Aviva Mining (Kenya) Limited ("AMKL"), the assets of which include
interests in a number of licenses in West Kenya, for initial cash consideration
of A$20 million. The acquisition is subject to the approval of Aviva's
shareholders, which will be sought at a general meeting in late August or early
September; and the consent of the Kenyan Competition Authority, with completion
expected shortly after.

Commenting on the acquisition, ABG's CEO Greg Hawkins said, "This acquisition
represents the first step in expanding our footprint outside of Tanzania and
building our future growth pipeline. The acquisition is an attractive entry
into an under explored and highly prospective land package in a country
bordering our existing operations. Whilst Kenya is a relatively new mining
destination, it has a solid transport infrastructure, a stable government and
ABG already has an established supply chain in country."

Through the acquisition of AMKL, ABG will acquire AMKL's 51% interest in a
joint venture ("Lonmin JV") with Lonmin plc ("Lonmin", LSE:LMI), and AMKL's
right to earn up to a 75% interest in a second joint venture ("Advance JV")
with Advance Gold Corporation ("Advance", TSXV:AAX). The exploration properties
subject to the Lonmin JV and the Advance JV are referred to herein as the
"Properties". In addition to the initial cash consideration of A$20 million,
ABG has agreed to make a further cash payment of A$10 million to Aviva upon
declaration by ABG of an National Instrument 43-101 ("NI 43-101") compliant
Indicated resource of 3 million ounces of gold on the Properties.

The principal assets of the Lonmin JV are two Special Licenses in West Kenya
(SL123 Ndori and SL213 Siaya, the "Lonmin JV Licenses"). Lonmin, through its
subsidiary AfriOre International (Barbados) Limited ("AfriOre"), holds the
remaining 49% interest in the Lonmin JV. Under the terms of the agreement
governing the Lonmin JV ("Lonmin JV Agreement"), AMKL would be entitled to
increase its interest in the Lonmin JV from 51% to 75% by meeting certain
conditions which include advancing the project through the pre-feasibility
stage. The terms of the Lonmin JV Agreement will remain unchanged following the
acquisition of AMKL.

The principal assets of the Advance JV are three Special Licenses in West Kenya
(SL265 Bukura, SL266 Sigalagala and SL267 Rosterman, together, the "Advance JV
Licenses"). Under the terms of the agreement governing the Advance JV ("Advance
JV Agreement"), AMKL would be entitled to acquire up to a 75% interest in the
Advance JV from Gold Rim Exploration Kenya Limited ("Gold Rim"), a subsidiary
of Advance, by meeting certain conditions which include making pre-defined
exploration expenditures as set out in the Advance JV Agreement. The terms of
the Advance JV Agreement will remain unchanged following the acquisition of
AMKL.

Rationale and Impact of the Acquisition:

The acquisition of the Properties provides an opportunity for ABG to enter an
under explored region with multiple styles and types of gold prospects in a
country with solid transport infrastructure and synergies with Tanzania.

The Properties, which have only seen limited previous exploration, contain
multiple large gold anomalies and cover five contiguous licenses over a land
package in excess of 2,800km2 of the prospective Ndori Greenstone Belt in
Kenya, which forms part of the Tanzanian Archaean Craton. Sporadic, historic
and current exploration activities have identified a large number of targets
that justify follow-up, and ABG intends to implement a systematic and focused
gold exploration programme. These targets will represent an important addition
to the grassroots and target delineation segments of our exploration pipeline.

Figure 1: Map showing the location of the West Kenya Licence Areas

[For map see www.africanbarrickgold.com]

Geology

The Properties cover the Ndori Greenstone Belt, one of several greenstone belts
in Kenya. The Ndori Greenstone Belt displays a similar stratigraphy to the Lake
Victoria Greenstone belts in Tanzania with volcanic, intrusive and sedimentary
rocks of the Nyanzian system, Kavirondian sediments, and younger granitic
intrusions. Local lithologies include iron-rich basalts and gabbros, andesite,
felsic volcanic, BIF-chert-tuff chemical and pyroclastic-sedimentary sequences,
as well as late Archean volcano-sedimentary lithologies within a broad
greenstone belt. Over twenty gold prospects worthy of further work have been
identified by Aviva across the Kakamega tenements. In addition Bumbo, a
stratabound Copper-Zinc-Gold deposit, occurs within Kavirondian sediments of
the Kakamega Belt.

Figure 3: Map showing geology and gold occurrences in the Properties

[For map see www.africanbarrickgold.com]

Historic Activity

The Lonmin JV has undertaken approximately A$8 million of project expenditure
to to the end of June 2012, including airborne and ground based geophysical
surveys, regional mapping, soil and rock chip sampling, and drilling. Historic
reconnaissance work, and ongoing exploration programmes, provides a strong
starting point for work in the region and these programmes have already
identified a pipeline of gold targets from grassroots to drill testing stage.
The results from the reverse circulation and diamond core drilling programmes
testing several of the delineated targets have validated these anomalies and
indicate good potential for economic gold mineralisation. At the same time, a
large number of targets remain untested or ineffectively tested by drilling.

The West Kenya project area has base metal potential, and the Lonmin JV
recently declared a revised JORC compliant Indicated and Inferred resource on
the Bumbo prospect of 1.58Mt at a 3.98% copper equivalent grade (above a
cut-off grade of 0.7% copper equivalent), consisting of:

Category   Volume   Tonnes   Copper Eq.  Copper   Gold    Silver   Zinc   
                                                                          
Indicated  0.41Mm3  1.32Mt   4.37%       2.29%    0.59g/t 36.60g/t 5.02%  
                                                                          
Inferred   0.09Mm3  0.27Mt   2.03%       1.05%    0.42g/t 19.89g/t 1.93%  
                                                                          
Total      0.50Mm3  1.58Mt   3.98%       2.08%    0.56g/t 33.77g/t 4.50%  

Transaction Description and License Details

ABG has agreed to pay initial cash consideration of A$20 million, plus an
amount equal to the completion working capital of AMKL to Aviva to acquire all
of the outstanding share capital of AMKL, with a further potential cash payment
of A$10 million to Aviva upon declaration by ABG of an NI 43-101 compliant
Indicated resource of 3 million ounces of gold on the Properties. The cash
consideration will be satisfied by cash on hand.

ABG has also agreed to provide up to an additional A$1 million to Aviva by way
of a purchase price advance in order to cover the costs of an agreed
exploration programme until the transaction closes, repayable under certain
circumstances in the event that the acquisition does not complete.

The gross assets subject to the transaction have a gross asset value of US$6.1
million and no profits were attributable to such gross assets for fiscal 2011
due to the Properties being in the exploration stage.

Lonmin JV

The Lonmin JV was formed in 2010, with AMKL earning its 51% interest by
spending in excess of US$3 million on exploration over the following 18 months.
The assets of the Lonmin JV include 100% of the two Lonmin JV Licenses, which
are contiguous tenements covering an area of 2,788km2 over the majority of the
Ndori Greenstone belt. Special Licence SL213 Ndori was granted for a period of
5 years expiring on 30 June 2013, and Special Licence SL123 Siaya was granted
for a period of three years expiring on 31 December 2013. Under the terms of
the Lonmin JV Agreement, AMKL would be entitled to increase its interest in the
Lonmin JV from 51% to 75% by completing a pre-feasibility study demonstrating a
pre-tax, pre-royalty net present value of US$50 million.

Advance JV

ABG will also acquire AMKL's right to earn up to a 75% interest in the Advance
JV. The Advance JV was approved by the Commissioner of Mines and Geology of
Kenya on 5 July 2011. The terms of the Advance JV Agreement require AMKL to
spend a minimum of US$100,000 in exploration activities on the Advance JV
Licenses during a preliminary 12 month exploration period and to make a further
US$100,000 cash payment to Gold Rim in order to exercise its option
("Preliminary Option") to earn an interest in the Advance JV. Following the
exercise of the Preliminary Option, which is expected to occur in August 2012
and will be funded by ABG, AMKL will be entitled to acquire a 51% interest in
the Advance JV by spending a further US$500,000 in exploration activities over
the next 24 months, and up to a 75% interest by solely funding an additional
US$1 million of exploration activities over a further period of 24 months.

The Advance JV Licenses are geographically located within the area of the
Lonmin JV license SL213, however, the Advance JV Licenses were previously
carved out into separate licenses. Under the terms of the existing agreement
between Aviva and Lonmin these properties fall within the designated 2km area
of interest and will be offered to the Lonmin JV after the commencement of the
earn-in period. The total area of the Advance JV Licenses covers 64km2 and
includes Kenya's largest historical gold mine, Rosterman, which is reported to
have produced 250,000 ounces of gold at over 13 grammes per tonne between 1932
and 1952. The Advance JV Licenses were granted to Gold Rim in October 2008 and
renewed for a further 2 years in 2010 until 30 September 2012.

Asset Location

Aviva's Kenyan assets are located in the Southwest corner of Kenya,
approximately 300km Northwest of Nairobi, near the border of Uganda and on the
shores of Lake Victoria. The license area is 30km from Kisumu, which is the
third largest city in Kenya, and is serviced by air (with a daily flight from
Nairobi), road, power and telecommunication networks. Tenements are cut by a
bitumen dual carriageway and a system of local unpaved roads and are inhabited
by mainly small scale subsistence farmers. There is a 750km rail connection to
the port of Mombasa, where ABG has an existing supply chain as a result of 90%
of North Mara's goods and major equipment for all of ABG's sites coming through
the port.

Kenya declared independence from the United Kingdom in 1963 and has generally
been stable since, with only three presidents in the last 49 years. The current
president, President Kibaki, has been in power for over 10 years, having formed
a Grand Coalition Government following disputed elections in 2007. The country
is predominantly Christian and due to its heritage it has both English and
Kiswahili as its two official languages.

Kenya is the largest economy in Central and East Africa with GDP in excess of
US$36 billion in 2011 with agriculture, telecoms and tourism accounting for
over 50% of this. It is a member of the East Africa Community ("EAC"), together
with Tanzania, Uganda, Rwanda and Burundi, and has a long history of
co-operation with other countries in the region. The EAC is pursuing closer
integration between the countries, and established a Customs Union in 2005
and a Common Market in 2010.

The country has limited commercial mining activity, but a significant colonial
and artisanal mining history. A draft mining code is currently being reviewed,
but is yet to be formally ratified.

In addition to the special licenses, the acquisition of AMKL will bring ABG a
strong Kenyan based exploration team and continuity of project history and
knowledge, as well as existing local and country Government and Ministry
relationships.

ENQUIRIES

For further information contact:

African Barrick Gold plc                +44 (0)207 129 7150                    

Andrew Wray, Head of Corporate Development & Investor Relations

Giles Blackham, Investor Relations Manager

RLM Finsbury                            +44 (0)207 251 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, unless otherwise stated in this announcement.

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, changes or developments in
political, economic or business conditions or national or local legislation in
countries in which ABG conducts or may in the future conduct business,
future 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, Kenyan shilling and
Tanzanian shilling exchange rates), ABG's ability to successfully integrate
this and 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 successfully and in a
timely manner 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.