NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION
TORONTO, June 18, 2019 (GLOBE NEWSWIRE) -- Barrick Gold Corporation (GOLD) (ABX.TO) (“Barrick” or the “Company”) today provides the following further update in relation to Acacia Mining plc (“Acacia”).
On May 21, 2019 Barrick announced that it had met with Directors and senior management of Acacia and presented a proposal for consideration by the independent directors of Acacia (“Independent Directors”) to acquire all of the Acacia shares it does not already own through a share for share exchange of 0.153 Barrick shares for each ordinary share of 10 pence each in Acacia (the “Proposal”). On the basis of the market closing price of a Barrick share on the New York Stock Exchange on June 17, 2019 and the 410,085,499 Acacia ordinary shares in issue on that date this implies a value for Acacia of US$887.8 million and total consideration to the minority shareholders of Acacia of US$320.1 million.
The Proposal represents a premium of 14.4% to the closing price of 151 pence per Acacia share on May 20, 2019 (the last trading day before announcement of the Proposal). The value for Acacia implied by the Proposal has increased from US$787 million at the date of announcement of the Proposal to US$887.8 million as at June 17, 2019, an increase of 12.8% based on movements in the share price.1
As has been widely reported, for the past two years, Barrick has been endeavoring to seek a settlement of Acacia’s disputes with the Government of Tanzania (the “GoT”) and to find a workable tax and regulatory framework for Acacia going forward. Due to requirements of the GoT, Acacia has not been able to participate in these meetings, but Barrick has been working in good faith with the consent and support of Acacia and the Independent Directors. Barrick has provided regular updates to the Independent Directors and Acacia management as well as the opportunity to review and comment on documentation flowing from these negotiations. The negotiations with the GoT have advanced to the point where draft documentation now has been initialed by the GoT, albeit with a number of substantive issues still outstanding.
The GoT has, however, now made it clear that it is not prepared to enter into settlement agreements directly with Acacia. In Barrick’s view, it is now clear that the relationship of Acacia with the GoT has been so damaged by the events that led to the concentrate ban being imposed by the GoT in March 2017 and by the subsequent arbitration proceedings initiated by Acacia against the GoT, that it is no longer possible for Acacia to continue to function as an independent public company, with substantially all of its value represented by assets in Tanzania.
Barrick has therefore proposed a solution which Barrick believes represents fair value for Acacia and is in the best interests of Acacia and its minority shareholders. The Proposal seeks to preserve, to the extent possible, the value of the Acacia assets and to give minority shareholders of Acacia the ability to benefit from any future potential upside in the Acacia assets and Barrick’s broader portfolio through ownership of Barrick shares.
1 Based on the market closing prices of the Acacia shares and Barrick shares on the London Stock Exchange and the New York Stock Exchange respectively on 20 May 2019 (the last trading day before announcement of the Proposal) and 17 June 2019 (the last trading day before this announcement) and the exchange rate on those dates of US$1/£0.786 and US$1/£0.798, respectively. The market prices of the Acacia and Barrick shares are the closing middle market quotations as derived from Bloomberg.
Update on the status of discussions
Barrick’s discussions with the Independent Directors in relation to the Proposal are continuing. Barrick considers that Acacia shareholders should be provided with further information in relation to the circumstances which led to Barrick presenting the Proposal to the Independent Directors and why it considers that the Proposal reflects fair value. In issuing this announcement Barrick is providing further information concerning the status of negotiations with the GoT and the detailed technical assessments of the Acacia mine plans that have been undertaken by Barrick, and which underpin Barrick’s view on the fairness of the Proposal.
GoT unwilling to enter into settlement with Acacia
As set out in the announcements made by Barrick and Acacia on May 21 and 22, 2019, the GoT negotiating team has written to Acacia’s three Tanzanian operating companies (the “TMCs”) to indicate that the GoT is resolved that it will not proceed to execute final agreements for the resolution of Acacia’s disputes if Acacia is one of the counterparties to the agreements. While a basis for a settlement has been developed, the terms have not yet been finalized and therefore still carry significant risk. Importantly, as highlighted by statements made by a GoT spokesperson and prominently reported in Tanzanian press, “the Government does not want the presence of Acacia in any form in the country”2 and “the Government has demanded that under no circumstances can Acacia be party to the agreements”3.
Draft settlement and sustainable framework for future operations are expected to result in significant value transfer to GoT
The key principle of the draft settlement agreements under discussion is that going forward the GoT and the TMCs will share the economic benefits derived from the Tanzanian mines on a 50/50 basis, based on the life of mine plans of the TMCs. The GoT will receive its share of economic benefits through taxes, royalties, fees and other fiscal levies and through the GoT’s 16% free carried interest in all distributions (including shareholder loan repayments) from the TMCs and a new Tanzanian management company. The 50/50 sharing arrangement will be reviewed annually to seek to ensure that the actual and projected sharing of economic benefits is in accordance with the 50/50 principle. The agreements also provide for payment by the Acacia group of the aggregate sum of US$300 million in consideration for the full, final and comprehensive settlement of all existing disputes between the GoT and the Acacia group including all liability to taxation and a waiver of actual or potential claims on a mutual basis. This US$300 million payment is outside of (and therefore not taken into account for the purposes of) the 50/50 sharing of the economic benefits over time. The draft settlement does involve a significant value transfer from Acacia to the GoT but this has been critical to agreeing potential draft settlement terms with the GoT and the creation of a viable operating framework for the TMCs going forward.
2 The Citizen ‘Barrick to force Acacia takeover’ 23 May 2019.
3 Daily News ‘Solve Acacia or no deal’ 23 May 2019.
Operating environment and loss of social license
The operating environment in Tanzania is increasingly challenging for the TMCs and there are no signs that this situation is improving. Indeed, Barrick’s own assessment is that the situation may deteriorate further if no near-term settlement can be secured. Examples of how difficult the operating environment has become include:
- Export ban: the continuing ban on the export of metallic mineral concentrates announced by the GoT in March 2017
- Bulyanhulu on care & maintenance: Bulyanhulu remains on care and maintenance, other than some reprocessing of tailings
- Criminal charges and detentions: Criminal charges have been brought against the TMCs in Tanzania and against three current Acacia employees and a former employee. Three of those individuals charged continue to be held in custody under non-bailable offences
- CEO unable to enter Tanzania: Barrick understands that the Interim CEO of Acacia has not been able to visit Tanzania since October 2018 and that no one from the senior management or Board of the Company has been able to engage with the GoT at a senior governmental level regarding the issues in dispute between Acacia and the GoT
- Environmental investigations: there remains the threat of additional environmental penalties and environmental protection orders being levied in relation to North Mara
Barrick believes that unless a solution is found to the current impasse in the short term there is the real risk of catastrophic loss of value for all stakeholders, and that the solution it has proposed to the Independent Directors of Acacia represents the only credible option to preserve, to the extent possible, the value of Acacia’s assets.
Barrick’s view of Acacia’s mine plans
As part of the negotiations with the GoT, and, specifically, to ensure a thorough understanding of the economic implications of the settlement terms and resulting fiscal regime, Barrick has had the opportunity to undertake detailed due diligence on the Acacia assets. As part of this, Barrick’s technical team reviewed Acacia’s current mine plans, including the mine plan supporting the Bulyanhulu optimization study, and related financial models, examined the mines’ historic performance, and conducted site visits to all three mines. As a result of this work, the Barrick technical team, which comprised several Qualified Persons (as defined in NI 43-101)4, has identified significant risks inherent in these operations and concluded that certain assumptions made by Acacia were not appropriately risked or supportable and that adjustments should be made.
- Resource uncertainty: resource uncertainty has been identified as a key area of concern. The Acacia mine plan for Bulyanhulu relies upon the Deep West Zone, the majority of which is currently classified as inferred resources and assumes substantial conversion of these inferred resources and homogeneity of the ore body. These assumptions have been made using an average of 200 meter spaced drill data, with no physical drill core made available to Barrick to confirm assumptions made. Given minimal drill data, significant uncertainties remain around size, grade, homogeneity and the geotechnical stress regime of this Deep West portion of the ore body. Barrick considers that it would be more appropriate to assume a 50% conversion rate and 20% dilution of the Deep West inferred resources, which reflects the expected variability based upon the historic conversion rate of inferred resources to reserves in the upper areas of the orebody.
- Grade continuity: Acacia’s mine plan assumes there is a high continuity of grade in the Deep West orebody with insufficient drill data to support this assumption. Barrick considers it appropriate to reduce the average grade of the Deep West Zone, resulting in a LOM grade of 8.6g/t to reflect what has been achieved historically in the upper zone, given the low intensity of drilling (average 200 meter drill spacing) and the fact that no drill core from the Deep West Zone was made available to Barrick to geologically support a significant uplift in grade.
- Throughput rates: Acacia’s mine plan also assumes that Bulyanhulu can achieve underground ore hoisting rates of 1,000 - 1,100 kt/year. This throughput is significantly higher than the annual average of 928kt over the last five full years of operation5, which was achieved at significantly shallower depths, mainly above the base of the shaft. Barrick considers it would be appropriate to cap underground ore production rates at 850 - 900 kt/year (during steady state underground (“UG”) production) due to the risks presented by the primary UG production area being situated at 1.7-2.6km below surface, well below historic production levels, and below the current mine shaft (1.1km depth). In Barrick’s view, this poses underground trucking bottlenecks and geotechnical stress restrictions which Barrick understands have not yet been fully modelled by Acacia. Despite producing at deeper levels, this adjusted rate proposed by Barrick is only slightly below the annual average achieved over the last five full years of operation6, a period which includes some of the best underground production levels ever achieved at Bulyanhulu, and from shallower production levels proximal to the base of the shaft.
- Production and costs: the reduction in tonnes and grade impacts both production and costs and therefore Barrick considers that it would be appropriate to reduce the average annual production presented by Acacia and to increase the fixed unit cost component accordingly.
- Capital expenditures: Barrick believes upfront capital spend will be higher than the US$140-160m startup costs assumed in Acacia’s optimization study due to additional conversion drilling requirements and the refurbishment of the Bulyanhulu plant prior to restart from care and maintenance, offset by lower overall LOM capital spend as a consequence of lower throughput.
4 National Instrument 43-101 – Standards of Disclosure for Mineral Projects is a national instrument setting out the standards of disclosure for mineral projects by Canadian issuers. Acacia reports its mineral resources and mineral resources estimates in compliance with NI-43-101. A Qualified Person is an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mineral development or mineral project assessment and has experience relevant to the subject matter, and is in good standing with a professional association.
5 Last five full years of operation are 2012 to 2016 (inclusive) given the export ban was announced in March 2017.
6 2012 to 2016 (inclusive) given export ban
The following table sets out a comparison between Acacia’s publicly disclosed parameters for Bulyanhulu, the mine’s 5-year historic performance, and the adjustments made by Barrick to Acacia’s mine plan.
|Parameter||Indicative optimization |
|Historic average – |
previous 5 years of full
|LOM Feed||18.9Mt* (18 year LOM)||NA||16.3Mt (18 year LOM)|
|Head Grade (g/t)||10.6g/t (LOM)**||8.5g/t****||8.6g/t (LOM)|
|Ore hoisted||1,000-1,100ktpa |
|928kt pa||850-900 ktpa |
|Gold produced||300-350kozpa |
|230koz pa****||250-289kozpa |
|Startup capital expenditure||US$140-160m||NA||US$190-210m|
* 18.9Mt calculated using 1,050kt per annum (median of steady state optimization study guidance) over 18 years
** 10.6g/t calculated using 325koz gold produced (median of steady state optimization study guidance) at 91% recovery (based on historical performance at Bulyanhulu) from 1,050kt feed per annum for the life of mine inclusive of the tailings storage facility (“TSF”) feed
*** Last five full years of operation are 2012 to 2016 (inclusive) given the export ban was announced in March 2017
**** Excludes reprocessed tailings
***** Barrick adjusted steady state figures based on 12 full calendar years of UG production, subsequent to the first 2 years of TSF feed during UG ramp up
- Grade of inferred/unclassified underground material: Acacia’s mine plan for North Mara assumes higher grades for the inferred and unclassified underground material than the current grade of its measured and indicated resource. The Barrick technical team has aligned the assumption with measured and indicated grades, resulting in a reduction of the grade of the inferred and unclassified underground material from 6.8g/t to 5.6g/t.
- G&A and UG mining costs: the Barrick technical team has made an upward adjustment to costs to represent what Barrick considers to be more realistic G&A and underground mining costs, benchmarked against historical levels achieved by Acacia and its own similar-sized underground operations in Africa; these adjustments increase average AISC to $877/oz.
- Capital expenditures: Barrick has identified a need for higher upfront capital spend at North Mara (increasing near-term capital spend to $385 million) to address additional grade control drilling, the need to upgrade from a cemented aggregate fill (“CAF”) to a paste filling plant, and costs to expand the lined tailing storage facility and improve the water management to conclusively address environmental risks.
The Proposal reflects fair value
The adjustments Barrick considers should be made to Acacia’s mine plans, together with the transfer of value to the GoT as a consequence of the tax settlement terms and new tax and regulatory framework for Acacia in Tanzania going forward, underpin Barrick’s view of the value of Acacia. Barrick continues to believe that the terms of the Proposal reflect the fair value of Acacia, not taking into account any further discount which could be applied to reflect the significant risks inherent in the Acacia business and remaining uncertainties of the settlement with the GoT.
Comments have been made as to the difference between Acacia’s carrying value in Barrick’s books as at December 31, 2018 and the value of its Proposal to Acacia. For the preparation of its 2018 accounts, the carrying value on Barrick’s books is based on the book value as disclosed by Acacia but also includes an intercompany asset held in the direct holding company of Acacia (which would not be part of any impairment assessment) and other minor adjustments. During H1 2019, Acacia updated its LOM models and subsequent to that the Barrick team has had an opportunity to conduct the diligence review described above and risk adjust the value of the assets. Given the value implied by Barrick’s adjusted LOM plans, this represents an indicator of impairment and Barrick expects to record a material impairment to its carrying value of Acacia in the current quarter.
Barrick believes that there is no other credible alternative solution
In the absence of a take-private transaction, Barrick does not consider there is any credible alternative solution which will preserve, to the extent possible, value for all stakeholders, and no such alternative has been presented by Acacia. In Barrick’s view the continuance of the arbitration proceedings involves significant risk. Barrick notes that Acacia has consistently stated that it would prefer a negotiated solution to its disputes with the GoT, whilst noting the risk of continuing and further legal or regulatory action by the GoT.
Takeover Code notes
The Proposal is subject to the satisfaction of a number of customary conditions, including receiving the recommendation of the Acacia board. Barrick reserves the right to waive all or any of such conditions at its discretion. The Proposal does not constitute an offer or impose any obligation on Barrick to make an offer. There can be no certainty that any offer for Acacia will ultimately take place, nor as to the structure of any such offer, should one be forthcoming, even if the pre-conditions are satisfied or waived. Barrick reserves the right to: (a) vary the form and/or mix of consideration referred to in this announcement and/or introduce other forms of consideration; and (b) make an offer or other proposal on less favorable terms than an exchange ratio of 0.153 Barrick shares for each ordinary share of Acacia referred to in this announcement with the agreement, recommendation or consent of the board of Acacia.
Barrick will have the right to reduce the number of new Barrick shares that Acacia minority shareholders will receive under the terms of the Proposal by the amount of any dividend (or other distribution) which is declared, paid or made by Acacia to Acacia shareholders.
This announcement does not amount to a firm intention to make an offer under Rule 2.7 of the Code, which regulates the making of offers for public companies listed in the UK. There can be no certainty any offer will be made, even if the pre-conditions referred to are satisfied or waived.
In accordance with Rule 2.6(a) of the Code, Barrick must, by not later than 5:00 p.m. on June 18, 2019, either announce a firm intention to make an offer for Acacia in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the UK Takeover Panel in accordance with Rule 2.6(c) of the Code.
A further announcement will be made as and when appropriate.
|Kathy du Plessis |
Barrick Investor and Media Relations
+44 20 7557 7738
Publication on Website
A copy of this announcement will be made available (subject to certain restrictions relating to persons resident in restricted jurisdictions) at www.barrick.com no later than 12.00 noon (London time) on 19 June 2019 (being the business day following the date of this announcement) in accordance with Rule 26.1(a) of the Code. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. The information disclosed in this announcement may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.
The Barrick shares mentioned in this announcement (the "Shares") have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) or under the securities laws of any state or other jurisdiction of the United States. This announcement does not constitute an offer to sell, or the solicitation of any offer to buy the Shares in the United States. Accordingly, the Shares may not be offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into the United States absent registration under the Securities Act or an exemption therefrom, nor shall there by any sale of the Shares in any jurisdiction in which such offer, solicitation or sale would be lawful.
Cautionary Statement on Forward-Looking Information
Certain information contained or incorporated by reference in this press release, including any information as to our strategy, projects, plans, or future financial or operating performance, constitutes “forward-looking statements”. All statements, other than statements of historical fact, are forward-looking statements. The words “will”, “imply”, “could”, “possible”, “seek”, “propose”, “may”, “can”, “should”, “could”, “would”, and similar expressions identify forward-looking statements. In particular, this press release contains forward-looking statements including, without limitation, with respect to the future growth, results of operations, performance, business prospects and opportunities of Barrick and Acacia, including gold production from Acacia’s mines; the Proposal; the integration of Acacia’s business with the existing operations of Barrick; the impact of the Proposal on the financial position of Barrick and Acacia; impairment charges to be recorded by Barrick; and the outlook for Barrick’s and Acacia’s respective businesses and the gold mining industry generally based on information currently available. These expectations may not be appropriate for other purposes.
Forward-looking statements are necessarily based upon a number of estimates and assumptions including material estimates and assumptions related to the factors set forth below that, while considered reasonable by the Company as at the date of this press release in light of management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements, and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: expectations regarding whether the Proposal will be formally announced including whether the pre-conditions to formal announcement of the Proposal will be satisfied, and the anticipated timing of a formal announcement; expectations regarding whether the Proposal will be completed, including whether any conditions to completion of the Proposal will be satisfied, and the anticipated timing for completion; the combined company’s future plans, business prospects and performance, growth potential, financial strength, market profile, revenues, working capital, capital expenditures, investment valuations, income, margins, access to capital and overall strategy; expectations regarding the receipt of any necessary regulatory and third party approvals and the expiration of all relevant waiting periods; the anticipated number of Barrick common shares to be issued as consideration for the Proposal, the expected total capitalization of Barrick on a consolidated basis following the Proposal and the ratio of the Barrick common shares to be held by Barrick shareholders and Acacia shareholders, respectively, following the Proposal; the anticipated benefits of the Proposal; expectations regarding the value and nature of the consideration payable to Acacia shareholders as a result of the Proposal; the anticipated mineral reserves of Barrick following completion of the Proposal; and the expenses of the Proposal; fluctuations in the spot and forward price of gold, copper, or certain other commodities (such as silver, diesel fuel, natural gas, and electricity); the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation, and exploration successes; risks associated with projects in the early stages of evaluation, and for which additional engineering and other analysis is required to fully assess their impact; the duration of the Tanzanian ban on mineral concentrate exports; the ultimate terms of any definitive agreement to resolve the dispute relating to the imposition of the concentrate export ban and allegations by the Government of Tanzania that Acacia under-declared the metal content of concentrate exports from Tanzania and related matters; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including geotechnical challenges and disruptions in the maintenance or provision of required infrastructure and information technology systems; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; adverse changes in our credit ratings; the impact of inflation; fluctuations in the currency markets; changes in national and local government legislation, taxation, controls or regulations and/ or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Tanzania and other jurisdictions in which the Company or its affiliates do or may carry on business in the future; lack of certainty with respect to foreign legal systems, corruption and other factors that are inconsistent with the rule of law; damage to the Company’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the Company’s handling of environmental matters or dealings with community groups, whether true or not; the possibility that future exploration results will not be consistent with the Company’s expectations; risks that exploration data may be incomplete and considerable additional work may be required to complete further evaluation, including but not limited to drilling, engineering and socioeconomic studies and investment; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation and legal and administrative proceedings; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the Company; our ability to successfully integrate acquisitions or complete divestitures; risks associated with working with partners in jointly controlled assets; employee relations including loss of key employees; increased costs and physical risks, including extreme weather events and resource shortages, related to climate change; availability and increased costs associated with mining inputs and labor. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold or copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks).
Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this press release are qualified by these cautionary statements. Specific reference is made to the most recent Form 40- F/Annual Information Form on file with the United States Securities and Exchange Commission (“SEC”) and Canadian provincial securities regulatory authorities for a more detailed discussion of some of the factors underlying forward-looking statements and the risks that may affect Barrick’s ability to achieve the expectations set forth in the forward-looking statements contained in this press release.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
- As per Acacia’s 2018 Annual Report, Acacia has identified certain measures in its public disclosures that are not measures defined under IFRS. Non-IFRS financial measures disclosed by Acacia’s management are provided as additional information to investors in order to provide them with an alternative method for assessing Acacia’s financial condition and operating results, and reflects more relevant measures for the industry in which Acacia operates. These measures are not in accordance with, or a substitute for, IFRS, and may be different from or inconsistent with non-IFRS financial measures used by other companies. “All-in sustaining costs” (AISC) per ounce is one such non-IFRS financial measure disclosed by Acacia. The measure is in accordance with the World Gold Council’s guidance issued in June 2013. It is calculated by taking cash cost per ounce sold (defined below) and adding corporate administration costs, share-based payments, reclamation and remediation costs for operating mines, corporate social responsibility expenses, mine exploration and study costs, realized gains and/or losses on operating hedges, capitalized stripping and underground development costs and sustaining capital expenditure. This is then divided by the total ounces sold. “Cash cost per ounce sold” is also a non-IFRS financial measure. Cash costs include all costs absorbed into inventory, as well as royalties, and production taxes, and exclude capitalized production stripping costs, inventory purchase accounting adjustments, unrealized gains/losses from non-hedge currency and commodity contracts, depreciation and amortization and corporate social responsibility charges. Cash cost is calculated net of co-product revenue. Cash cost per ounce sold is calculated by dividing the aggregate of these costs by total ounces sold. AISC is intended to provide additional information on the total sustaining cost for each ounce sold, taking into account expenditure incurred in addition to direct mining costs and selling costs.