Acacia reports 13pc drop in gold output - The East African

Acacia reports 13pc drop in gold output

Tuesday April 23 2019

A miner inside the Bulyanhulu gold mine in northern Tanzania. PHOTO | FILE

A miner inside Bulyanhulu gold mine in northern Tanzania. Acacia recorded a 13.3 per cent drop in gold production in Q1 of this year in the wake of an unresolved tax dispute with the government. FILE PHOTO | NMG 

BEATRICE MATERU
By BEATRICE MATERU
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Tanzanian gold mining company Acacia Mining Plc recorded a 13.3 per cent drop in gold production in the first quarter of this year in the wake of an unresolved tax dispute with the government.

“We achieved gold production of 104,899 ounces for the first quarter of the year," said Peter Geleta, Acacia’s interim chief executive officer.

"While historically our production is typically stronger in the second half of the year, production this quarter was impacted by unanticipated production issues at our North Mara mine,” added Mr Geleta.

Acacia blamed the drop on the performance of the North Mara and Buzwagi mines.

In the same quarter last year, North Mara’s production stood at 76,769 ounces.

This year, it produced 66,324 ounces during the same period, a 13.6 per cent drop.

According to the firm, the fall in gold production was mainly driven by the fall of the Gokona underground mine in December 2018 and an excavator breakdown in the Nyabirama open pit mine.

Buzwagi’s production was 28,577 ounces, 20 per cent lower than the 35,685 ounces produced in the same period last year, blamed on the lower grade stockpile processing at the mine.

Bulyanhulu produced 9,999 ounces for the quarter, 17.3 per cent above 2018’s 8,527 ounces and in line with expectations.

This was attributed to the higher grades recovered from the treatment of tailings, and improvements in the plant’s throughput.

Acacia said it now targets between 500,000 and 550,000 ounces against 2018’s target of between 435,000 and 475,000 ounces at an all-in sustaining cost (AISC) of $935-$985 per ounce.

“We have taken immediate steps to address these, introducing a revised mining plan in mid-March for both the underground and open pit mines, and we remain confident of delivering against our full-year production guidance,” said Mr Geleta

In February, Tanzanian authorities and Canadian miner Barrick Gold announced that they had worked out a plan to settle the dispute with Acacia Mining Plc.

Prof Palamagamba Kabudi, The Legal Affairs Minister, promised progress before end of March, but the London-listed mining firm is yet to receive the proposal.

“Acacia is looking forward to receiving a detailed proposal for a comprehensive resolution of Acacia’s disputes with the Government, once Barrick’s negotiations have been successfully concluded,” said Acacia in a statement.

Dispute

Acacia has been engaged in a long-standing dispute with Tanzania over tax evasion, breach of environmental regulations and other issues for two years now.

Although locked out of the talks between the government and Barrick, Acacia now says it is banking on Barrick Gold to secure its interest in its operations and its existence in the country.

“We continue to provide support to Barrick in its discussions with the government of Tanzania and believe that a negotiated resolution is in the best interests of all stakeholders,” said Mr Geleta.

Under the agreed October 2017 framework, which has yet to be implemented, Barrick executive chairman John Thornton and Tanzania’s President John Magufuli agreed that Acacia Mining would give the government $300 million as an act of good faith, a 16 per cent stake and a 50/50 split of revenue from its mines.

Acacia did not announce dividend for its shareholders last year, citing a two-year export ban on gold and copper concentrates and criminal charges against former and current employees.

“As a result of the challenging operating environment, and delays in reaching a negotiated solution with the government of Tanzania with the current liquidity requirements, the board of directors has not made a final recommended dividend yet for the year 2018,” said Mr Geleta.

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