Acacia Mining (LON:ACA), Tanzania’s No.1 gold producer, revealed Thursday that revenue in the first quarter of the year had slumped almost 50% after reduced operations at its flagship Bulyanhulu gold mine continued to drag sales down.
The company, majority owned by Barrick Gold (TSX, NYSE:ABX), also said production dropped 45% to 120,981 ounces in the first three months of 2018 when compared to the same period last year.
Acacia is Tanzania’s largest gold miner but it has scaled back its operations in the East African country after the government introduced a ban on concentrate exports in March 2017.
The output slump is a result of Acacia’s forced move to scale back operations in the East African nation due to an ongoing ban on exports of metal concentrate, which represent about a third of the miner’s production. As a result, adjusted underlying earnings (EBITDA) fell to $44 million from $82 million a year earlier.
Shares crashed almost 12% on the news, trading at 136.8p by 2:27 p.m. GMT, which means they’ve lost more than two-thirds of their value since the export ban was introduced just over a year ago.
Acacia, however, kept its full-year production and costs forecast unchanged, targeting output of between 435,000-475,000 ounces, or at least 38% lower than 2017, at a cost of $935-985 per ounce.
Since March 2017, when the ban on concentrates came into effect, the Barrick’s unit has faced a series of accusations, including tax evasion and illegal operations, which prompted authorities to question staff and even block one of the firm’s senior executives from leaving the country in one occasion.
To make things worse, Tanzania’s President John Magufuli, served the company in July with a $190 billion tax bill.
Acacia, which is awaiting a final agreement between Barrick and Magufuli, confirmed in February that Chinese suitors were circling. It said at the time it had held talks with a “small number” of investors over the potential sale of stakes in some or all of its Tanzanian mines — Bulyanhulu, Buzwagi and North Mara.