12 February 2018

Tanzania: Acacia Mining Slumps Into Losses as Export Ban Hits on Earnings

Gold producer Acacia Mining has registered net loss of $707 million for the year ending December 31, 2017, on the back of a hefty charge on the value of its main assets in Tanzania.

As a result, Acacia has scrapped its 2017 dividend and announced that it will slash its gold production in 2018 up to 43 per cent as its Buzwagi mine transitions to processing stockpiles while Bulyanhulu, whose operations have been scaled down, solely re-processes tailings.

The company, which is majority owned by Barrick Gold, said its financial performance was significantly impacted by the post-tax non-cash impairment charge of $644 million, resulting from uncertainty in the operating environment and the ban on exporting concentrates.

The goldminer's revenue fell by 29 per cent to $752 million over the period, as the Tanzania's ban on export of mineral concentrates introduced in March last year hit the firm's earnings.

Acacia said the export ban, which forced it to reduce operations at its flagship Bulyanhulu mine, resulted in about $264 million in lost revenue and a cash burn of $237 million in 2017.

"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 $875 per ounce," said Peter Geleta, the interim CEO of Acacia Mining.

"While Acacia Mining was 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."

Acacia is embroiled in a long-standing tax dispute with Tanzanian president John Magufuli's government which accuses it of evading taxes stretching years back.

In July, Tanzania slapped Acacia with a $190 billion tax bill saying that the company owed the country $40 billion in unpaid taxes which result from under-declaring exports and $150 billion in penalties and interest.

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