Acacia Mining posts a USD 700 million loss on Tanzania woes

Image Source: cityam.com

City AM reported that Acacia, which is majority-owned by Canada-based Barrick Gold, booked a USD 644 million impairment charge due to Tanzania's ban on the export of gold and copper concentrates, which was introduced in March last year. The firm said the ban resulted in USD 264 million of lost revenue in the year after it was forced to reduce operations at its flagship mine, Bulyanhulu.

Gold production fell seven per cent compared with 2016 to 767,883 ounces, due to lower output at Bulyanhulu.

Revenue was 29 % lower than the previous year at USD 752m.

Acacia's cash balance fell from USD 318m to USD 81m at the end of the year because of lost revenues caused by the ban.

The miner said the loss of free cash flow in 2017 has caused the board to recommend cutting the final dividend.

Mr Henry Croft, a research analyst at Accendo Markets said that "Almost a year on from the announcement of the export ban imposed by the African state’s government, and with no resolution yet reached, the company’s dividend has finally been sacrificed in order to protect its financial position amid a negative cash flow in 2017."

Barrick Gold has said it aimed to reach a deal with the Tanzanian government in the first half of 2018, but Croft warned that even once a deal is reached, the impact on Acacia's mining capacity will be felt "long into the future."

Mr Croft said that "With every month and quarter that passes the protracted disagreement claims the support of more investors. This morning’s cutting of the dividend will be the final straw for many loyal shareholders who have stuck with the company in the hope a deal will be reached within the next five months.”

Source : City AM