Acacia shares fall as it cancels dividend amid gold dispute
SHARES in gold miner Acacia Mining tumbled again yesterday after it laid bare the financial cost of its dispute with the government of Tanzania.
Revenue at the FTSE 250 company crashed 29pc to $391.6m (£301.8m) in the six months to June 30 as it reeled from a ban on exporting gold concentrate, a powdered form of the precious metal, which was imposed in March.
Acacia shares slid 17pc to 232.4p as it revealed its cash reserves sank from $318m to $176m over the period. It managed to contain the fall in its pre-tax profits to just 2pc, at $99.5m, but it will not pay an interim dividend for the first time since it was founded in 2000.
Tanzania has accused Acacia of a multi-billion dollar fraud by under-reporting the amount of the concentrate it has exported in an attempt to avoid paying royalties to the government. Acacia has strongly denied the charges.
The company is still able to export gold bars, which make up 70pc of its output, but it has been stockpiling concentrate at two of its three mines while it waits for the ban to be lifted.
Brad Gordon, chief executive, said Acacia’s underlying performance was “the best it had ever achieved”, pointing out gold production of 428,203 ounces was 4pc higher than a year ago – a result hailed as “better than expected” by analysts.
Negotiations to end the dispute will be led by Acacia’s majority shareholder, Barrick Gold, which has a 64pc stake. Mr Gordon said he was “not happy” about being excluded from the talks.
“I would rather be sitting around the table, but we have to respect the government’s wishes,” he said.
Mr Gordon confirmed Acacia may close its loss-making Bulyanhulu mine by the end of this quarter if the ban continues. The mine is the oldest of Acacia’s three operating sites and employs 3,000 people. In a separate statement, the company denied reports some of its international staff had been asked to leave Tanzania.
Andrew Wray, chief financial officer, insisted Acacia was generating enough cash to weather the storm.
“We could go on for quite some time if we wished to, but it gets to the point where it’s not prudent to do so,” Mr Wray said.