LONDON (Alliance News) - Acacia Mining PLC said Friday it was "pleased" with its third-quarter operational performance, increasing its full year production guidance, but is "deeply concerned" with the increasing risks for its Tanzania operations.
On Wednesday, Acacia Mining - majority-owned by Canadian gold mining giant Barrick Gold Corp - reported three of its subsidiaries in Tanzania, as well as a current and former employee, have been charged under the country's anti-money laundering laws.
The three companies are Pangea Minerals Ltd, Bulyanhulu Gold Mine Ltd, and North Mara Gold Mine Ltd.
The miner said both a current and former employee had been arrested by the Tanzanian Prevention & Combating of Crime Bureau.
Acacia said it is currently considering its legal position but a "negotiated resolution remains the preferred outcome".
"I am particularly concerned with the criminal charges now being brought against several current or former employees over the past week, in connection with matters which are being raised in the arbitrations with the government of Tanzania relating to Bulyanhulu and Buzwagi," said Peter Geleta, interim chief executive officer.
"We are seeking to engage with Barrick Gold to understand how the recent significant escalations of government actions against BGML, NMGML and PML and employees will be taken into account in any further direct discussions between Barrick and the government.
"We will also be reaching out to the government to seek the opportunity for direct dialogue regarding the ongoing disputes between the government, the company and the broader Acacia Group, and also to inform the government that failing a negotiated resolution the company may need to pursue claims under the relevant bilateral investment treaty."
Acacia said "the great majority" of charges against Acacia relate to matters being discussed with the Tanzanian government by major shareholder Barrick Gold. It is to consider how these charges may affect the ongoing talks.
Separately, last week an employee was charged by Tanzania's corruption taskforce over activity related to land purchases at its North Mara mine in the country.
Acacia said all three companies, as well as its employee and former employee, have pleaded not guilty to all charges, but those accused are not permitted bail under Tanzanian law.
A total of 39 charges have been brought against them, and Acacia said many relate to "historical structuring and financing" of the three subsidiaries going back to 2008.
The charges include tax evasion, conspiracy, a charge under organised crime legislation, forgery, money laundering, and corruption.
Acacia is not aware of any material developments or progress in the discussions between the government of Tanzania and Barrick.
The miner's gold production in the three months ended September was 136,640 ounces, 29% lower than the third quarter of 2017 but ahead of the current year's output in the first quarter, 120,981 ounces, and the second quarter, 133,778 ounces.
Acacia sold 135,875 ounces of gold in the quarter - a 2.3% increase on the year before - with a net average realise gold price of USD1,211 per ounce - a 5.3% drop on the year before.
The miner's revenue for the third quarter was USD165.6 million, down 2.9% from the USD170.6 million recorded a year ago.
As a result of "consistently strong" production in the year to date, Acacia now expects its full-year production to exceed its guidance of 435,000 ounces to 475,000 ounces and come in "marginally" in excess of 500,000 ounces.
The miner recorded all-in sustaining costs in the quarter of USD880 per ounce sold, which is 6% lower than a year ago and 4% lower than the previous quarter. Acacia said it is now tracking towards the lower end of its full-year guidance ranges of between USD935 per ounce and USD985 per ounce.
Geleta continued: "This is a testament to the resilience and dedication of all of our people who continue to do their very best in the face of what is now an increasingly challenging operating environment in Tanzania."
"Having returned the group to free cash generation during the second quarter of this year, I am also pleased to note that we have maintained this trend, remaining cash flow positive this quarter, with a net cash position of USD74 million."
Shares in Acacia Mining were down 8.2% Friday morning at 145.38 pence each. The stock is down 76% over the past two years.
