Acacia Mining ascends to three-year high after solid first quarter

Acacia Mining reported better first-quarter gold production than forecast and a 24% rise in earnings before interest tax, depreciation and amortisation to $66m that almost hit targets thanks to an increase in revenue and lower cash costs.

Production reached 190,210oz at cash costs of $693 per oz, better than consensus forecasts for 179,000oz, at $734/oz.

All-in sustaining costs (AISC) were $959 per oz, lower than the consensus $1,020/oz.

This was the best cost performance since 2010, pointed out chief executive Brad Gordon.

Revenues of $221m, up 3% on the same period last year, were generated from sales of 184,000oz of gold, generating EBITDA that was only fractionally short of the consensus $66m forecast.

Net earnings per share of 4.4 cents were up 69% year-on-year and ahead of 4.1c forecasts.

“All three operations performed ahead of expectations leading to a $19m increase in our net cash position, after making our first prepayment of corporate tax amounting to $10m," Gordon said.

Acacia, which changed its name from African Barrick Gold in 2014, increased net cash by $19m to $124m by the period end, including cash of $237m, after lower than expected capex of $36m.

A net loss of $52m was due to a $70m tax additional provision due to the ongoing tax disputes in Tanzania.

Gordon said the group's performance was not reflected in the headline net earnings given the tax provision taken following the recent adverse court ruling over the Bulyanhulu mine, but he noted that underlying adjusted earnings of $18m were 71% higher than Q1 2015.

As management made no comment on full-year guidance, analysts presumed it remained unchanged at production of 750,000-800,000oz, AISC of $950-980/oz and capex of $175-180m.

Investec said Acacia "looks to be heading towards the optimal end of these ranges. We are encouraged that the company is once again a net cash generator."

Canaccord said: "Operationally, as evidenced by the strong production result, the company has recovered from its weak Q3 2015 performance, particularly at the Bulyanhulu and Buzwagi mines. With the strong operating performance and EBITDA close to consensus, we expect the market to take this result positively."

Shares in Acacia were 4% higher at 332.4p by 0930 BST on Thursday, their highest level since early 2013.