Acacia Mining to sell non-core asset for $45m

Acacia Mining has agreed the sale of a non-core royalty over the Houndé Mine in Burkina Faso for $45m.

The Tanzania-based gold miner said the existing 2% net smelter royalty has been owned by Acacia and its predecessor companies since 2010. Following a competitive process the royalty has been purchased by Sandstorm Gold Ltd, a TSX- and NYSE-listed company.

"Acacia’s decision to dispose of this royalty follows the announcement of commercial production at the mine in October and is consistent with our disciplined approach to capital allocation," it said.

The deal is expected to close in the early part of the first quarter of next year, and, together with the measures taken at both Bulyanhulu and Buzwagi to reduce cash outflows, should provide further strength to the company's balance sheet.

RBC Capital Markets analyst Richard Hatch said: "We include no value for the NSR in our Acacia model and view the sale as a slight positive for our valuation. We forecast year-end cash for Acacia of $69m (net debt: $2m) and ‎expect the transaction to improve the company's financial position as it completes the transition of Buly onto limited operations, operates Buzwagi on an adjusted flowsheet (to produce doré only) and continues operations at North Mara (which produces doré).

"We continue to advise caution around the shares until a successful resolution is found with the Tanzanian government over the current dispute, but view this morning’s announcement as positive for the shares."

At 0915 GMT, the shares were up 1.1% to 181.60p.