Acacia’s share price drops amid uncertainty in Tanzania
Tuesday March 13 2018
A miner inside the Bulyanhulu gold mine in northern Tanzania. Late last month, Acacia Mining announced it was considering exiting the Tanzanian market or finding a strategic partner for the business. PHOTO | FILE
Acacia Mining Plc’s share price at the Dar es Salaam Stock Exchange (DSE) last week fell by 8 per cent, to settle at 5,240 ($2.31) at close of business Thursday, from Tshs 5,640 ($2.51) recorded the start of the week.
This came as the country weighs its options in the Tanzanian market, where it has come under close scrutiny and pressure after it was accused of underdeclaring its exports last year.
And late last month, it announced it was considering exiting the Tanzanian market or finding a strategic partner for the business.
The goldminer, owned by Barrick Gold, is grappling with a ban on concentrates introduced in March 2017 that in September forced it to reduce operations at its flagship Bulyanhulu mine.
Tanzania is implementing changes in its mining industry to reap greater benefits from its natural resources. In July, Acacia was served with a $190 billion bill for unpaid dues.
Barrick is still negotiating with the government on a settlement. The settlement is meant to redefine Acacia’s relationship with the government.
The government expects a $300 million payment from Acacia in support of ongoing efforts to resolve outstanding tax claims, and 50:50 benefits from the three Acacia’s mining sites.
“While we were impacted by events beyond our control, we took decisive action to stabilise our business and believe our operations are now well placed to deliver in 2018,” said Peter Geleta, Interim CEO of Acacia in a statement.
Meanwhile, the gold miner has announced a postponement of the auction of its mining assets at the Buzwagi goldmine.
Acacia said it would operate the mine until 2020, amid rumours that it had extracted the entire gold find.
The plant that has a maximum capacity of 12,000 tonnes of ore per day (4.4 million tonnes per year) said “the stockpiled ore will be processed in order to continue to produce gold at the operation until 2020.”
The company scrapped its 2017 dividend after full-year core earnings fell by more than a third because of the ban on unprocessed mineral exports in Tanzania.
It said full-year earnings before interest, tax, depreciation and amortisation fell 38 per cent to $257 million after taking a $644 million impairment charge.