Acacia Mining shares hit by Jefferies downgrade

Acacia Mining was under the cosh as Jefferies downgraded the stock to ‘hold’ from ‘buy’ and cut the price target to 475p from 575p.

It said news flow on Friday of the ban on copper/gold concentrate exports from Tanzania has direct and indirect impacts, negatively affecting several points of its prior investment thesis.

“With no clarity over a type or timing of a resolution, we fear Acacia shares will be suppressed and downgrade our recommendation.”

On Friday, the company acknowledged a press release from the Tanzanian Ministry of Energy and Minerals regarding a ban of gold/copper concentrate exports, effective immediately.

It said it has has ceased exports of gold/copper concentrate and was urgently seeking further clarification from the Ministry of Energy and Minerals.

Jefferies said the direct impact on the group is clear as last year, this represented around 30% of group revenues.

“While the direct impact is clear, it is more than just greater uncertainty driving today's downgrade. Our past investment case and bullish view on the shares rested on several factors including growing free cash flow, higher shareholder returns, strengthened in-country relations and catalysts for a lowering of the ABX stake.

“All of which have now been negatively impacted, making the argument for a valuation re-rating much harder to justify.”

At 0905 GMT, the shares were down 6.4% to 431.30p.