Update following the 2nd Committee Findings

13 June 2017

Yesterday was another difficult day for all everyone employed by Acacia or working at our mines or indirectly linked to the operation of our mines. The media coverage over the next few weeks will continue to put pressure on all of us, our families and our friends. For the 96% of our people at our mines who are Tanzanian it must be even tougher as your fellow countrymen think that you have been unpatriotic and stolen from them for many years and impacted on their quality of life.

Brad Gordon Chief Executive Officer

I want to be clear, what was presented in both the Committee 1 and Committee 2 reports is categorically not true, despite what the majority of people say and believe. We have never stolen, we have never evaded taxes, we have never forged documents to avoid paying royalties and we have never been unlawful. I will set out below why the allegations made yesterday are untrue and why the President has been once again been provided with inaccurate information by his Committees. We run Acacia as an international company, and expect all of our people to have the highest levels of integrity. What we have been accused of is simply not possible.

Let's look further at the details: we were accused of operating illegally in the country for the last 19 years as Acacia Mining plc is not registered in the country. We do not operate illegally. Our mines are owned and operated by Tanzanian incorporated and registered companies in line with the law. These companies (Pangea Minerals Limited, Bulyanhulu Gold Mine Limited and North Mara Gold Mine Limited) pay all appropriate taxes and file annual returns to the TRA. These companies are ultimately owned by Acacia Mining plc, the holding company of the Acacia group of companies. Acacia is effectively the company brand in Tanzania. The Acacia group includes companies across the world, in particular the other African countries where we have projects: Kenya, Burkina Faso and Mali. Acacia Mining plc is a UK incorporated and registered company. Note that we have been trying to explain to the TRA for a number of years that Acacia Mining plc is a UK company which is listed on both the London and Dar es Salaam stock markets and owned by hundreds of shareholders. This kind of structure is the same as many international companies operating in Tanzania and is not illegal or a way to avoid taxes in any way. The structure is also no secret (we have been reporting on the structure annually to the public in our audited annual reports, and to the TRA and other agencies of the Tanzanian Government. We also disclosed this as part of the information memorandum that was approved by the Tanzanian Capital Markets and Security Authority (CMSA) at the time of our secondary listing on the Dar es Salaam Stock Exchange in 2011. We were also accused of underpaying taxes by up to US$50 billion (TSH110 trillion). This is not true. Let's put this number into perspective. If the number was accurate, and using a simple tax rate of 30% on just sales (not even taxable profits) it would imply we have had well over $150 billion (TSH33 trillion) of sales in the last 15 years. Let’s be clear – if this were true we would be the biggest mining company on the planet (not just gold mining). The biggest mining company in the world is BHP, which has around 20 mines in 10 countries and is worth US$90 billion (TSH200 trillion). This is just not possible with our three mines. The value of our overall company today is around US$1.2 billion (TSH2.6 trillion) and we are being asked to pay outstanding taxes of US$50 billion (TSH110 trillion). It does not make sense.

www.acaciamining.com

In reality the revenues that we have created from Bulyanhulu and Buzwagi since we started operating in total have been less than US$6 billion (TSH13.2 trillion) which includes gold bar sales. If it were just the concentrate then it is just US$3.3 billion (TSH 7.2 trillion) in nearly 15 years. As you know we are audited domestically and internationally (by leading international auditing firms who audit many companies in many industries all over the world), sell our products to traders and smelters who pay us for the exact contents and we fully declare all of this. How could we possibly have avoided paying taxes that are more than 10x our actual sales? This would just be impossible. I won't go into all of the allegations here, but I want to be clear, we have declared everything we produce and sell. For example we have not tried to hide the number of containers we sell. This would be impossible to do anyway given the number of companies and government agencies involved from trucking, port handling, shipping and then the smelters. Yesterday was bitterly disappointing in so many ways as it jeopardises the very existence of our company. The Second Committee findings appeared to be based on the First Committee findings which we have repeatedly said are wrong, don't match the 20 years of local and international independent testing that we have done and dramatically overstate the mineral contents of the containers. We refute the announced findings of the Second Committee, just as we refute the findings of the First Committee. We have asked for the First Committee’s Report, to try to understand how they could have reached their impossible findings, but unfortunately we have still not seen this Report. We will also ask to see the Second Committee’s Report, so that we can try to understand the findings that were announced yesterday, and hope that the Government will provide us with a copy. We have asked for an independent review of the contents of our concentrates to avoid exactly this scenario that we are publically accused of a theft that has simply never happened but unfortunately we have not yet been granted this request. From the tone of the event yesterday and the media coverage today it is clear that we are being seen as unpatriotic and are stealing the minerals of Tanzania and have unfair contracts. This couldn’t be further from the truth; we are a Tanzanian Mining Champion. Over the years we have voluntarily made a number of amendments to the contracts signed many years ago to ensure that more of the benefit goes to Tanzania, even before the investors who paid for these mines to be built and have had investment repaid. We have pre-paid taxes, increased royalty rates, increased local service levies and invest more in our communities than the rest of the mining sector combined. We have many Tanzanians in senior positions within our company and more than 96% of our staff at the mines are Tanzanian. Each of those people has had extensive training and development over many years and we have nurtured some of the leading talents in the country. As it stands, incorrect and impossible results from samples taken from just 44 containers out of tens of thousands are now being used to destroy the reputation of the largest foreign investor in the country, one of the largest private employers and one of the largest tax payers in the country. We have invested over US$4 billion (TSH 8.8 trillion) into the country to build and sustain our mines, spent well over US$3 billion (TSH6.6 trillion) with Tanzanian suppliers to help run our business and paid over US$1 billion (TSH2.2 trillion) in taxes and royalties. We are a long term partner for Tanzania who has always acted lawfully. We believe we have an important part to play with the Government in achieving the same objectives for helping Tanzania achieve its development goals. We will continue to seek a resolution through dialogue with the Government. If this is not possible then it is a very bad signal for all current and future investors in this country. I believe that the truth will prevail and I will continue to do my best to make that happen. Until that point, please continue to stay strong and safe, I am sorry that you have been caught up in this.

www.acaciamining.com