Acacia Mining reports muted year as gold prices fall

Acacia Mining remained confident in a low gold price environment at the end of 2015, with the company reporting muted full year numbers on Monday, but an ongoing cost cutting plan to ensure sustainability.

The FTSE 250 mining firm saw revenue dip 7% in the 12 months to 31 December to $868m (£597.71m), which it blamed on the 8% lower average gold price during the year.

Its EBITDA of $175m was 31% lower than in 2014, again primarily due to lower revenue.

Acacia Mining reported adjusted net earnings of $7m, or 1.7c per share. Its cash position on 31 December was $233m, with net cash of $105m - down $46m on 2014.

During the year, the company committed total capital expenditure of $184m - 30% lower than 2014, with the board citing stringent capital controls.

"2015 was another year of transformation at Acacia as we continued to transition our company into a low cost producer," said chief executive Brad Gordon.

"During the year we delivered gold production of 731,912 ounces, a third consecutive annual increase, with our continued investment in the turnaround of Bulyanhulu and the successful transition to underground operations at North Mara, leading to all-in sustaining costs remaining flat year-on-year at $1,112 per ounce," he added.

The company's cash costs were up during the year, however, by 5% to $772 per ounce sold.

In light of lower gold prices, the company reviewed the carrying value of its assets and incurred a non-cash post-tax impairment charge of $189m at Buzwagi.

It still expected to generate free cash flow at both the mine and the group in 2016 at levels well below current gold prices.

"We continue to have one of the strongest balance sheets in the sector, and as a result of this and expected improvements in production, costs and cash flow generation in 2016, the board has recommended maintaining the final dividend," said Gordon.

Acacia Mining's board proposed a final dividend of 2.8c per share, bringing the total dividend for the year in line with 2014 at 4.2c per share.

The company's total reserves were reduced to 8.7m ounces, from 12.5m, with the primary impact being at Bulyanhulu due to updated operating assumptions and lower gold price assumptions.

Acacia's total reserves and resources were reduced by 6% to 28.5m ounces, due to revised assumptions and depletion.