Acacia Mining cash dwindles as revenues hit by Tanzania export ban

A day after a deal was struck to try and resolve its exports and tax dispute with the Tanzanian government, Acacia Mining reported revenue down 40% for the third quarter and a much diminished cash balance.

From 191,203 oz of gold produced during the quarter, the FTSE 250-listed company sold 132,787 oz to generate revenue of $171m, down 40% as the Tanzania's ban on concentrate exports resulted in the loss of roughly $90m of gross revenue during the quarter.

With cash costs for the quarter of $616 per oz and all-in sustaining costs of $939 per oz, respectively 3% higher and 6% lower than the same quarter last year, Acacia generated earnings before interest, tax, depreciation and amortisation of $50m, down 60% year on year.

Net earnings came in at $16m, or 3.9 cents per share, down from $53m last year, with adjusted net earnings of $35m, down 32%.

At the end of September, Acacia had cash on hand of $95m and net cash of $24m.

A day earlier, President of the Tanzania, John Magufuli and Barrick Gold, Acacia's 64%-owning parent, signed a framework agreement for Tanzania to take a 16% stake in the London-listed company's three mines in the country, share mining revenues 50-50 and for Acacia to pay Tanzania a one-off $300m to "resolve outstanding tax claims".

Acacia said on Friday that it was yet to receive a copy of the agreement and that no formal proposal has been put to it.

"As stated at the press conference, any proposal agreed in principle between Barrick and the GoT will require Acacia’s approval. Acacia will consider any proposal once it receives the full details and a further update will be provided when appropriate."

According to Barrick's statement overnight, a new Tanzanian operating company will be created to manage Acacia's Bulyanhulu, Buzwagi and North Mara mines, and all future operations in the country, with Tanzania to participate in decisions related to operations, investment, planning, procurement, and marketing.

This company will maximise employment of local workers at all levels of the business, from board membership to operations.

With the 50/50 revenue split, the government’s share is proposed to be delivered in the form of royalties, taxes, and a 16% free carry interest in the operations.

"Barrick and the government of Tanzania are also reviewing conditions for the lifting of the country’s concentrate export ban," the agreement stated.