Acacia output in Q3 beats set target

Dar es Salaam. Owing to continued strong performance Acacia Mining company expects its full-year output to be about 5 per cent higher than the top end of its initially guided 750,000 oz to 780,000 oz gold production forecast.

“Our strong third-quarter operational and financial results represent another significant step forward for Acacia, particularly considering some of the headwinds experienced during the quarter,” CEO Brad Gordon said in a statement on Friday.

The company’s North Mara operations, in the Tarime District, in Tanzania, delivered 112 523 oz at an all-in sustaining cost (AISC) of $655/oz. This more than offset the impact of operational stoppages at Bulyanhulu and the deferred access to higher grades at Buzwagi, both in Shinyanga Region.

Group AISC for the quarter, of $998/oz, which included $97/oz in share-based valuation charges, was 16 per cent lower year-on-year. “We have also increased our net cash position by a further $32 million to $203 million, which means we have close to doubled our net cash already in 2016,” Gordon added.

The company’s overall gold production of 204 726 oz for the quarter was 25 per cent higher year-on-year, while gold sales rose by 24 per cent year-on-year to 206 488 oz. Meanwhile, Acacia earned revenue of $285 million in the quarter under review, up 48 per cent from the third quarter of 2015, owing to higher gold sales and net realised gold price.

Its earnings before interest, taxes, depreciation and amortisation rose to $125 million, $104 million higher than the year-ago comparative period, despite the $20 million share-based valuation charges.

FTSE 250 Acacia pleased investors with the glittering performance in its third quarter.

Shares in the company jumped more than 9 per cent to £5.14 in early trade after it reported a 25 per cent leap in gold production year-on-year.

Acacia is locked in a $41m dispute with the Tanzanian Revenue Authority, which claims its UK plc is withholding tax on dividends paid in London. “In our view these are not taxable in Tanzania,” said Andrew Wray, chief financial officer.

He added that the company had not taken a provision for the bill as it was “confident of the legal arguments” in its favour. The case is with the Court of Appeal.