ACACIA MINING Q1 PROFIT SLUMP ON LOW OUTPUT

ACACIA Mining revenue for the first quarter of 2018 fell by 33 per cent on lower gold sales due to declined output after reducing operations at its flagship gold mine amid a tax dispute with the government.

Acacia, Tanzania’s largest gold miner, said in a financial statement yesterday that its gold production fell 45 percent in the first quarter from a year earlier to 120,981 ounces, mainly due to lower output at its flagship Bulyanhulu mine which is being transitioned to reduced operations in September 2017, and Buzwagi production being sourced primarily from lower grade ore stockpiles.

The company stuck to its full-year targets, targeting output of between 435,000-475,000 ounces, or at least 38 percent lower than 2017, at a cost of $935-985 per ounce. Gold sales of 116,955 ounces, 37 per cent lower than Q1 2017, slightly below gold produced for the quarter due to the timing of shipments.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) for the three months to March 31 fell to $44 million (30.99 million pounds) from $82 million a year earlier, it said.

Discussions between parent Barrick and the government to resolve both Tanzania’s export ban on concentrates and the tax dispute are ongoing, Acacia said. Barrick struck a deal in October with the government that was supposed to resolve the tax dispute.

It would see Acacia pay $300 million to the government, hand over a 16 percent stake in its mines and split ‘economic benefits’ from operations. However, Acacia has said any agreement would need to be reviewed by its board and expects a detailed version of the deal within the first half of the year.

Acacia is conducting a study this year on Bulyanhulu to find the best way to eventually re-open the mine.

“If the settlement agreement is in place, which we certainly expect it to be, then you would look at re-opening Bulyahulu sometime in 2019 and ramping it up to full scale in 2020 and 2021,” interim CEO Peter Geleta told a conference call following the results. Acacia Mining is preparing to end mining activities at Buzwagi mine later this year in transition to processing stockpiles.

Acacia Mining General Manager in-charge of operations in Tanzania, Asa Mwaipopo, had told the 'Daily News' in February that mining activities at Buzwagi would in the third quarter of this year after depletion of resources.

The mine will not be closed as wrongly reported by a section of the media, but it would continue with processing of a stockpiles of materials for several years, he said. "Mining activities at Buzwagi will end at the third quarter of this year, but other activities will continue. We will begin processing activities of stockpiles of our materials for two to three years," he said in a telephone interview.

Daily News