Acacia Mining's shares fall as Numis cuts rating to 'add' from 'buy'

Numis on Monday reduced Acacia Mining’s rating to ‘add’ from ‘buy’ following the recent rally in shares.

The broker, however, raised its target price to 400p from 310p as it upgraded its forecasts for gold prices for 2016 and 2017.

“The main driver of this is an increase in our 2016 gold price assumption from US$1,106 per ounce (oz) to US$1245/oz and our 2017 gold price forecast from US$1,200/oz to US$1,250/oz,” said Numis analyst Jonathan Guy.

Acacia Mining last Thursday reported first quarter production of 190,210 oz at cash costs of $693/oz, better than consensus forecasts for 179,000oz, at $734/oz.

The group posted a 24% rise in earnings before interest tax, depreciation and amortisation to $66m thanks to an increase in revenue and lower cash costs.

Numis said the performance was boosted by a marked improvement at the Bulyanhulu gold mine, with production of 78,400 oz supported by an 18% increase in grade.

“Whilst Acacia remains a preferred name as the potential at Buly is unlocked we pull back our recommendation from ‘buy’ to an ‘add’ following the recent rally.”

Shares fell 1.39% to 325.90p at 0950 BST.