LONDON (Alliance News) - Acacia Mining PLC on Friday said profit slumped in the first half of its current financial year due to lower production, as the Tanzanian ban on metal concentrates continued to hamper the miner's performance.
Acacia Mining reported a 46% decline in pretax profit to USD56.7 million in the six months ended June 30, from USD99.6 million for the same period the year before, on revenue that dropped 15% to USD333.4 million from USD391.7 million.
Acacia Mining saw a decrease in gold production by 41% to 254,759 ounces in the period from 428,203 ounces produced the prior year. The company said it sold 251,045 ounces of gold, down from 312,438 ounces year-on-year.
The average price in the period was USD1,328 per ounce, up from USD1,235 the year before, while the all-in-sustaining cost increased to USD945 per ounce from USD893 per ounce.
At the North Mara region in Tanzania, the company achieved production of 162,689 ounces for the first half, down 9% compared with the same period in 2017, as a result of a higher proportion of mining taking place in the lower-grade West Zone.
At Buzwagi gold mine, production of 73,100 ounces was 42% lower than in the comparative period in 2017, as a result of the mine transitioning to a lower grade stockpile processing operation.
The Bulyanhulu mine produced 18,970 gold ounces, 85% lower than the same period in 2017, due to the decision to place the underground mine on reduced operations.
Acacia has been locked in a dispute with the Tanzanian government after it introduced a ban on exporting metallic mineral concentrates to promote the creation of a domestic smelting industry in March 2017. This has severely dented the production levels at Bulyanhulu and Buzwagi projects.
In the third quarter of 2017, Acacia Mining took the decision to place Bulyanhulu on reduced
operations due to the unsustainable losses experienced at the mine due to the inability to export concentrate. During the first half of 2018, reduced operating costs amounted to USD16.6 million and mainly consisted of site overhead costs.
Acacia said it is continues to support mining company Barrick Gold Corp, which is in talks with the government of Tanzania to agree on the details of the framework announced in 2017. However, it has not been directly involved in those discussions to-date.
As a result of the uncertainty around the potential resolution of the disputes between the company and the Tanzanian government, Acacia has decided not to pay an interim dividend.
The prior year it has not declared an interim dividend due to the negative cash flow.
"We succeeded in delivering another strong operational performance during the first half," said Interim Chief Executive Peter Geleta.
"The changes we made to the business in late 2017 have delivered the desired results, helping to return the group to free cash generation for the first time since the fourth quarter of 2016 and we are on track to achieve the top end of our production guidance range of 435,000 to 475,000 ounces for 2018," added Geleta.
Shares in Acacia Mining were trading 1.8% lower on Friday at 115.35 pence each.
