Acacia Mining Generates Cash, Forecasts Higher Gold Output-Update
January 21 2016 - 7:32AM
Dow Jones News
By Alex MacDonald
LONDON--Acacia Mining PLC (ABGLY) shares rose after Tanzania's
largest gold miner said on Thursday it has returned to cash
generation in the fourth quarter because of higher gold output and
forecast even higher output next year as it continues to develop
its flagship Bulyanhulu mine.
The U.K.-listed miner, formerly known as African Barrick Gold
PLC, said it produced 200,723 troy ounces of gold in the three
months ended Dec. 31, 2015, up 11% from the same quarter a year ago
on increased output from Bulyanhulu and higher grades mined at its
North Mara mine.
This contributed to a 1.8% rise in full-year gold output to
731,912 ounces, slightly ahead of its lowered guidance for output
on par with the previous year.
"We continue to focus on reducing our cost base to ensure our
assets are able to generate free cash flow in the current gold
price environment," said Acacia's Chief Executive Brad Gordon.
Acacia Mining managed to boost output amid a broader
cost-cutting effort that included 1,050 job losses, equivalent to
about 27% of its workforce, as it seeks to boost cashflow amid a
protracted slump in the gold price.
The company has focused on mechanizing its flagship Bulyanhulu
mine and improving the operational performance of its North Mara
and Buzwagi mines as it grapples with a gold price hovering at
around $1,103 an ounce as of Thursday, far below peaks of recent
years including an intraday high of $1,907 an ounce in 2011.
The company has also cut its capital expenditure while its
executive management and board members have voluntarily agreed to
cut their salaries by 10%.
The company's cost-cutting efforts are bearing fruit with its
all-in sustaining cash cost dropping 7.7% on year to $1,004 an
ounces in the fourth quarter, Acacia said. Full-year all-in
sustaining costs rose 0.6% to $1,112 an ounce, but the miner
expects this to fall to around $950 to $980 an ounce this year with
an increase in gold production to 750,000 to 780,000 ounces.
"We [will] still add cash to the balance sheet at under $1,000
an ounce," said Mr. Gordon in a phone interview with The Wall
Street Journal.
At 1123 GMT, Acacia's shares were up 6.2% at 171.9 pence a
share. Canaccord Genuity analyst Nick Hatch said Acacia's 2015
output was ahead of the firm's revised guidance, while the 2016
output guidance has been lowered from a target of 850,000 ounces of
gold this year announced in November.
Mr. Gordon said the figure was lowered after the company decided
to do more analysis on the upper east zone of the Bulyanhulu mine
given the lower gold price.
"We could have pushed on and mined it, but with the focus on
free cashflow we decided to pull out of it...until we have more
information."
Mr. Gordon said the company remains committed to its policy of
paying out 30% of its free cash flow as dividend.
The company remains open to acquisitions if the right
opportunity presents itself but for now the company remains focused
on its improving its existing operations.
Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
January 21, 2016 07:17 ET (12:17 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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