Acacia Mining reports fall in H1 earnings as costs rise

Acacia Mining reported a fall in first-half core earnings due to an impairment on a project and higher costs mainly stemming from arbitration with the Tanzanian government.

The London-listed miner said earnings before interest, taxes, depreciation and amortisation (EBITDA) fell to $133.6 million, from $161 million a year earlier. It also recorded a net loss of $19.1 million in the second quarter.

Tanzania, where Acacia has all of its operating mines, has introduced sweeping changes to its mining industry including banning the export of raw minerals and introducing laws to reap more revenue from the sector.

Chief Financial Officer Jaco Maritz said he expects costs to decline in the second half of the year.

Gold production for the first half reached 254,759 ounces at an all-in sustaining cost (AISC) of $945 per ounce, with output on track for the top end of Acacia’s target for the year.

Acacia expects to mine between 435,000 and 475,000 ounces for 2018 at an AISC of $935-985 per ounce. Output fell 41 percent from a year earlier because Acacia reduced operations at its Bulyanhulu mine due to the concentrate export ban.

Barrick is still negotiating with the government on behalf of Acacia and last year struck a “framework agreement” that would see Acacia pay $300 million in goodwill, split economic benefits and hand over 16 percent ownership of its mines.