Acacia Mining posts $59m profit for 2018

Tuesday February 19 2019

A miner inside Bulyanhulu gold mine in northern Tanzania. Acacia, which is Tanzania’s largest gold miner, posted net earnings of $59 million after a net loss of $707 million in 2017. PHOTO | FILE


Tanzania-based mining company Acacia returned to profitability in 2018, posting net earnings of $59 million after a net loss of $707 million the previous year.

The London-listed company said its revenue last year was $664 million, 12 per cent lower than in 2017.

Acacia Mining’s gross profit dropped 12 per cent to $226 million, but was partly offset by $45 million from the sale of a non-core royalty in Burkina Faso.

The company’s cash balance increased by $50 million to $130 million last year after a strong operational performance, resulting in a net cash balance of $88 million at the end of 2018.

Acacia interim CEO Peter Geleta said that in 2018, the company stabilised the business with a focus on operational performance across all three mines — Bulyanhulu, North Mara and Buzwagi.

“We achieved gold production of 521,980 ounces for the year, substantially ahead of our initial 2018 production guidance of 435,000 to 475,000 ounces, and we maintained strong cost discipline, achieving an all-in sustaining cost of $905 per ounce sold, well below the full year-guidance range of $935 to $985 per ounce,” Mr. Geleta said.



Acacia Mining paid $127 million in taxes and royalties to Tanzania in corporate tax of $42 million and royalties of $51 million, and payroll and other taxes of $34 million. The company spent over $273 million on local supplies.

“This result would not have been possible without the resilience, hard work and determination of all of our people, particularly given the continued challenging operating environment.

“We returned the company to free cash flow generation in the second quarter of the year, a trend that was sustained during the second half, ending the year with a net cash position of $88 million,” Mr Geleta said, adding that this year they expect production of 500,000-550,000 ounces of gold, at an all-in sustaining cost of $860-$920 per ounce with cash costs of $665-$710 per ounce.

On the operations front, the company produced 521,980 ounces of gold, ahead of an initial estimation of 435,000-475,000 ounces for the year. It sold 520,380 ounces, in line with production for the year.

“We are encouraged by the provisional outcomes of the Bulyanhulu optimisation study, with a focus on achieving higher margin ounces in line with our focus on free cash generation.

“The provisional outcomes support a potential life of mine of 18 years and delivery of an average steady-state production rate of 300,000 to 350,000 ounces per year at all-in sustaining costs of $700 to $750 per ounce assuming a successful resumption of underground mining and the ability to economically produce and sell gold concentrates,” Mr Geleta said.


Bulyanhulu’s optimisation would see the firm inject up to $140 million in investment, including capital, drilling, development and rehabilitation costs over a 12-18 month period, successful resumption of underground mining operations, and a return to full production and sale of gold in both doré and concentrates.

“A final decision to resume underground mining operations will be considered by the board at the appropriate time,” Acacia said. The firm continues to provide support to Barrick in its discussions with Tanzania, and says that a “negotiated resolution” is in the best interests of all stakeholders.

However, Acacia is yet to receive a detailed proposal between Barrick and Tanzania for a comprehensive resolution of Acacia’s disputes with the Magufuli administration.

“Acacia is engaging with Barrick to understand Barrick’s plans for the next steps in its direct discussions with Tanzania. International arbitration is also underway to protect the businesses and continues to be progressed. Tanzania is engaging in the process and filed its defence in October 2018,” the mining firm said.