Acacia Mining

“We delivered resilient operational performance during a challenging 2017, with full year gold production of 767,883 ounces at all-in sustaining costs (AISC) of US$875 per ounce”, says Peter Geleta, interim CEO of Acacia Mining.

“Whilst Acacia Mining was impacted by events beyond our control, we took decisive action to stabilize our business and believe our operations are now well placed to deliver in 2018.

“The challenges in our operating environment led to our production guidance being revised during 2017, whilst the ongoing ban on the export of gold/copper concentrate meant that we were unable to export and sell 185,800 ounces of produced gold which led to a substantial cash outflow.

“As expected, Acacia Mining will see a step-down in production in 2018 to 435,000-475,000 ounces as Buzwagi transitions to processing stockpiles and Bulyanhulu, whilst in reduced operations, solely re-processes tailings.

“The continued cost discipline at Acacia Mining means that AISC will remain competitive at $935-985 per ounce.

“Our focus remains on delivering optimal performance from all aspects of the business within our control in the current operating environment, returning the business to free cash generation and delivering value for all of our stakeholders.

“We are supporting efforts towards achieving a negotiated resolution with the Tanzanian Government.”

Acacia Mining operational highlights

  • Total Recordable Injury Frequency Rate (TRIFR) of 0.45, 39% lower than 2016
  • 2017 gold production of 767,883 ounces, 7% lower than 2016 as a result of lower production at Bulyanhulu primarily due to the transition to reduced operations in Q4 2017
  • Gold sales of 592,861 ounces, 22% lower than production, comprised 19,720 ounces of gold in concentrate, 10% of total concentrate production due to the concentrate export ban imposed in March 2017 and 573,141 ounces of gold in doré, in line with doré production
  • 2017 AISC1 of $875 per ounce sold, below full year guidance range and our lowest ever achieved
  • Successful drilling programme at North Mara has more than doubled the Mineral Reserve at the Gokona Underground to 1.3 Moz
  • New management leading stabilisation of company and post year-end appointed a senior Tanzanian to lead Tanzanian business

Acacia mining financial highlights

  • Financial performance was significantly impacted by a post-tax non-cash impairment charge of $644 million resulting from uncertainty in the operating environment and the ban on exporting concentrate, resulting in $264 million of lost revenue in the year
  • Revenue of $752 million, 29% lower than 2016, with Adjusted EBITDA of $311 million, 24% down from 2016
  • Net loss of US$707 million includes a post-tax impairment charge of $644 million, equating to a loss of 173 cents per share
  • Adjusted net earnings of $146 million and Adjusted EPS of 35.7 cents were 9% below 2016
  • Cash balance fell from $318 million to $81 million at year-end, due to lost revenue resulting from the concentrate ban and a gross build-up of VAT receivables of $91 million, but was boosted post year-end by the sale of a non-core royalty for $45 million
  • Entered into option agreements to provide a floor price of at least $1,300 per ounce for majority of H1 2018 production
  • Contributed $143 million of taxes and royalties to Tanzania and implemented projects benefiting over 60,000 Tanzanians in 2017

Feature image credit: Acacia Mining