Acacia Mining production and revenue fall in first quarter

Acacia Mining issued its first-quarter results on Thursday, reporting that its production tracked full-year guidance during the period, whilst all three operations delivered in line with their respective mine plans.

The London-listed firm said gold production totalled 120,981 ounces, 45% lower than the same time last year, primarily due to Bulyanhulu being transitioned to reduced operations in September, and Buzwagi’s production being sourced primarily from lower grade ore stockpiles.

Gold sales were 116,955 ounces in the three months to 31 March - 37% lower year-on-year, and slightly below gold produced for the quarter due to the timing of shipments.

All-in sustaining costs were $976 per ounce sold, which was 4% above the first quarter of 2017, with cash costs of $715 per ounce sold 24% higher.

On the financial front, Acacia said first quarter revenue of $157m was 33% lower than last year due to lower sales, offset slightly by higher realised gold prices.

EBITDA reached $86m - a 4% improvement on 2017, primarily due to the sale of a non-core royalty asset for $45m, which completed in January.

Adjusted EBITDA was $44m.

Net earnings surged to $50m, or 12.2 US cents per share, up from $27m, with adjusted net earnings of $7m a 73% reduction on the first quarter of 2017

Cash on hand totalled $107m as of 31 March, an increase of $26m from the 2017 year-end.

The company entered into option agreements to provide a floor price of at least $1,320 per ounce for the majority of first half production during the period.

Additionally, the board said that in response to a number of expressions of potential interest, it began a process during the quarter with a small number of Chinese investors to explore the value to the company of selling a stake in its Tanzanian operations.

“Acacia continued to demonstrate resilience during the first quarter, delivering solid production of 120,981 ounces at all-in sustaining costs of $976 per ounce sold,” said interim chief executive Peter Geleta.

“Production at all three of our assets was in line with our mine plans and puts us in a good position to deliver against our full year guidance of 435,000-475,000 ounces at an AISC of $935-985 per ounce.”

Geleta said the switch to stockpile processing at Buzwagi and the move to reduced operations at Bulyanhulu in late 2017 were effectively executed, and the board was “pleased” to report an increase in its cash balance to $107m.

“This was driven by the delivery of our operational plans and the sale of a non-core royalty that completed in January.

“We continue to take measures to further stabilise our balance sheet and continue to provide support to Barrick in its ongoing discussions with the Government of Tanzania.”