Acacia Mining’s dreadful year ends with ?500m loss

The interim boss of Acacia has called for “patience” from investors and insisted the “good times will come back” after a long-running dispute with the government of Tanzania pushed the miner to a $700m (?505m) annual loss.
Peter Geleta, who stepped into the role in November, said: “Last year was difficult, it was a bit of a wobble. But my key focus is to be part of the team that keeps the turnaround going that was started under the previous management team and get us through this bump.”
The FTSE 250 company, which has three mines in Tanzania, cancelled its dividend after revealing the full extent of the devastating ban on selling powdered gold concentrate, which the East African country enacted last March.
The government had accused the miner of underreporting the scale of its gold exports and hit it with an $180bn demand for back taxes.
The mining company has denied all accusations of avoiding tax and says it has invested $4bn in the country over 15 years. But its management has been locked out of talks to resolve the dispute with its majority shareholder, Barrick of Canada, which has a 63pc stake, taking the lead.
At the end of last year Acacia’s chief executive and chief financial officer stood down and the company put one of its mines on reduced operations. The miner has stockpiled 185,000 ounces of gold concentrate and is now producing only gold bars, which are not affected by the ban. Mr Geleta said this meant “whatever we produce, we can sell”.
But investors were discouraged to note the lack of an update on when the ban might be lifted, and sent the shares down 17pc to 142.45p. The stock has fallen 69pc in a year.
In October Barrick set out a tentative plan to break the impasse but more details are expected in “the first half of 2018”. At one point Acacia management had been afraid to set foot in Tanzania for fear of being detained, but Mr Geleta said the situation on the ground had “calmed down” and he had made a number of visits to the country. One of his first acts has been to promote a couple of Tanzanians to senior management roles.
For the year to December, Acacia’s revenue fell by a quarter to $751m, after the export ban hit around 30pc of its output. It booked a $644m impairment charge and swung to a $709m loss from a pre-tax profit of $242m the year before. Gold production fell 7pc to 767,883 ounces.
Acacia Mining’s dreadful year ends with ?500m loss

Acacia has put the Bulyanhulu mine on reduced operations
Mr Geleta, who joined Acacia in 2012 after a series of senior roles at AngloGold Ashanti and Barrick, said: “I’d ask for patience. We have a number of legacy issues we need to deal with. But we have got fantastic people and really good assets. The good times will come back.”
Analysts at SP Angel noted that, amid the gloom, the company had at least managed to reduce the cost of mining its gold, down to $587 an ounce. “Acacia Mining has battled external conditions this year and produced record low sustaining costs of production. We wish the company well in its efforts to return to positive cash flow this year,” they said.
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