Gold miner Acacia Mining has reported a 15 percent drop in its 2018 first-half earnings, attributed to impairment on a project and high costs related to a dispute with the Tanzanian government that pushed the company into a $19.1 million second-quarter loss.
The London-listed miner said its gross profit fell to $133.6 million, from $161 million in the same period last year, booking a net loss.
First half revenue was $333.4 million, 15 percent lower than the same period last year, with net earnings dropping 51 percent to $30.9 million, from $62.5 million.
The miner was impacted by a $24.2 million impairment at Nyanzaga, with adjusted net earnings of $13.5 million, 79 per cent lower than the first half of last year.
Cash generated from operating activities in the first half of this year was $58.9 million, $57.6 million higher than the first six months of 2017.
It also said that it generated $14 million of free cashflow in the second quarter of this year, due to strong operational performance.
The cash balance rose 49 percent during the reporting period to $120.1 million, due to a noncore royalty sale and the strong operational performance.
“We expect to see costs decline in the second half of the year,” said chief financial officer Jaco Maritz.
The miner’s gold production in the first half of this year stood at 7,222 kg, 41 percent lower than the same period last year.
Between March and June, production stood at 3,792kg, 36 percent lower than the same period last year, but 11 percent above the first three months of this year.
Acacia also sold 3,800kg of gold over the past three months, 5 percent higher than the second quarter of last year. The firm expects to mine between 12,000kg and 13,500kg this year.
“The changes we made to the business in late 2017 have helped to return the Group to free cash generation for the first time since the fourth quarter of 2016. Our priority remains on optimising performance across all areas of our operations as we manage through the current uncertainty in the operating environment and the ongoing disputes with the Tanzania government,” said Acacia Mining interim chief executive Peter Geleta.
Acacia also revealed that its VAT returns currently stand at $64 million for exports alone and $172.5 million pending receivables as at the end of last month. The miner also announced that it will forgo the establishment of another gold mine in Tanzania after agreeing to sell its stake in the Nyanzaga Gold Project.
“Post period end, conditional agreement with OreCorp Ltd, operator of the Nyanzaga Project, for them to take full ownership of the project in return for total consideration of $10 million and a $15 million capped net smelter royalty,” Acacia said in a statement.