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acacia mining

Acacia enters into gold protection measures

LSE-listed Acacia Mining has bought put options covering 210 000 oz of gold at a strike price of $1 300/oz as it continues implementing ongoing cash outflow mitigation measures.

The group on Wednesday announced that the $3.2-million option provided a minimum price for the majority of the group’s expected doré production for the next six months above the budgeted gold price of $1 200/oz, along with full upside exposure should the gold price continue to trade above $1 300/oz.

The options will expire in equal instalments of 35 000 oz a month over the period.

This followed the reduction of operational activity at its Bulyanhulu mine, in Tanzania, earlier this week, owing to the pressures of unsustainable cash outflows at the mine owing to the ongoing concentrate ban, which was imposed on March 3.

At the time, Acacia had highlighted the negative impact of Tanzania’s gold and copper concentrate export ban, resulting in a concentrate inventory build-up of about $265-million and a negative cash flow of around $15-million a month.

Over the next three months, Acacia will focus on moving the mine to a reduced operational state, undertaking consultations with its stakeholders and ceasing underground activity, with the processing of underground ore to be halted within the next four weeks.

Despite several mitigating interventions, the loss of revenue, together with an outflow of $65-million in indirect taxes and costs from other changes to the operating environment, has led to a significant cash outflow of about $210-million in the 2017 year-to-date.

 

Source: Mining Weekly

Acacia Mining says would cost $30m to close Bulyanhulu mine

LONDON/BENGALURU – Acacia Mining said on Friday it would cost about $30-million to put its Bulyanhulu mine in Tanzania under care and maintenance as an export ban on the miner’s metals weighed.

Shares in the unit of Barrick Gold rose 4.7% after the company stuck to its full-year production guidance despite the ban.

Acacia is losing $15-million per month after Tanzania banned the export of all unprocessed ore in March, forcing the company to make contingency plans in case a resolution is not found.

Chief Executive Brad Gordon told a conference call on Friday it would cost $30-million to shut Bulyanhulu mine for layoffs and breaking contracts and between $2-million to $3-million per month in care and maintenance charges.

Tanzanian President John Magufuli fired his mining minister and the chief of the state-run mineral audit agency last week after an investigation into possible undeclared exports by mining companies, including Acacia, to evade tax.

A second audit of Acacia is now under way after the first audit committee last week said it found Acacia had 10 times more gold in its containers than the company had declared, as well as undeclared minerals such as iron and sulphur.

Acacia has denied any wrongdoing and said it still has not seen the report.

“If we get to a point following the release of the second report where we see an impasse in dialogue with the government then we would put Bulyanhulu on care and maintenance,” Gordon said, adding that the burn on cash could also be a trigger.

The ban mainly affects the Bulyanhulu mine which is a larger, newer mine that has higher running costs. Buzwagi mine is nearing the end of its life.

It said production for the year would still fall between 850 000 oz to 900 000 oz.

Acacia, which is also listed in Tanzania, said its cash at the end of May was $165-million.

Gordon said he was accompanied this week by Acacia chairperson and Barrick president Kelvin Dushnisky on a trip to Tanzania in an effort to resolve the ban.

Source : Mining Weekly