Row overshadows Acacia profit
Acacia Mining beat forecasts on Monday with figures for production and costs in 2018 that lifted it back into profit, but the gold miner is still grappling with a tax dispute in Tanzania, where it operates all its mines.
The share price of Acacia, majority owned by Barrick Gold, was steady while the rest of the market rose, finding little impetus despite reporting gold output of 521,980oz at a cost of $905/oz. Both figures were lower than 2017 but ahead of expectations.
“Financials for Acacia remain somewhat of a sideshow due to the ongoing negotiations between parent Barrick and the government of Tanzania,” said RBC analyst James Bell.
The stock is still up more than 50% since September when Barrick said it was buying Randgold Resources and when Mark Bristow was named as CEO, taking over as head of the merged entity from January.
Acacia’s gains were fuelled by expectations that Bristow, who has broad experience in Africa, could reach a deal with Tanzania. Acacia has cut output by a third since the government banned the export of mineral concentrates in 2017 after accusing the firm of tax evasion. Acacia denies the charges.
Peter Geleta, interim CEO of Acacia, said talks with Tanzania were progressing but did not give details. “There is momentum in the discussions and we are receiving feedback from the Barrick guys that negotiations are progressing well,” he said.
Mark Bristow, the CEO of Barrick Gold, which is the majority owner of Acacia Mining.
Barrick had been unable to hold direct talks with Acacia.
Barrick’s head of Africa and Middle East operations, Willem Jacobs, is leading talks with Tanzania. Last week, Bristow declined to give a timeline.
Geleta said Acacia wanted to secure a negotiated settlement but was also working on international arbitration, which he said was “never the preferred option”. Arbitration could offer an outcome by the end of 2019.
“Whatever settlement is reached needs to deal with the historical issues but it also needs to set the rules of the game going forward,” Geleta said.
Acacia said expects 2019 production to be between 500,000oz and 550,000oz at a cost of between $860 and $920 an ounce. Basic earnings per share totalled 14.4c compared with a loss of 172.5c a year ago, while fourth-quarter earnings before interest, tax, depreciation and amortisation were $48m.
“They delivered a very good set of set of results operationally and 2019 promises more of the same,” Investec analyst Hunter Hillcoat said.
“They are doing well, things considered.” all