Acacia Mining Committed to Paying Dividend After Swing to Net Loss
February 15 2016 - 6:31AM
Dow Jones News
By Alex MacDonald
LONDON--Acacia Mining PLC (ACA.LN), Tanzania's largest gold
miner, said Monday it remains committed to paying another dividend
after swinging to a net loss last year as a result of the lower
gold price environment.
The U.K.-listed miner, previously known as African Barrick Gold,
declared a total dividend for 2015 of $0.042 cents a share, in line
with 2014 despite swinging to a net loss of $197 million for the
year ended Dec. 31, 2015, compared with a net profit of $89 million
the year before.
Acacia stuck to its dividend policy on expectations it will
return to free cash flow generation this year due to its cost
cutting efforts and plans to produce more gold. This stands in
contrast to other miners such as Rio Tinto PLC (RIO), the world's
second largest mining company, who scrapped its progressive
dividend policy in a surprise move last week after swinging to a
annual net loss.
Acacia's decision to keep its dividend policy is "more of a
statement of our future capacity to generate cash flow," Chief
Executive Brad Gordon told The Wall Street Journal in an
interview.
Acacia could generate between $50 million to $80 million in free
cash flow this year, Chief Financial Officer Andrew Wray said in
the same interview. This is based on expectations that the company
expects to earn a free cash flow margin of $50 to $100 an ounce
based on a $1,100 an ounce gold price, he said.
Acacia returned to free cash flow generation in the fourth
quarter of last year and expects to continue to generate free cash
flow next year as it ramps up the group's gold output to between
750,000 to 780,000 ounces at an all-in sustaining cash cost of $950
to $980 an ounce.
This follows a 2% rise in gold output to 731,912 ounces last
year at an all-in sustaining cash cost of $1,112 an ounce, broadly
on par with the year before.
Acacia's bottom line took a hit from a non-cash, post-tax
impairment charge of $189 million on its Buzwagi mine as a result
of the lower gold price, which also caused revenue to fall 7% to
$868 million.
Looking ahead, Mr. Wray said the Buzwagi mine is nearing the end
of its life with plans to stop mining operations there in the first
half of next year and finish processing stockpiled ore two years
after. Lower gold output from Buzwagi this year will be offset by
higher output from its Bulyanhulu mine, where the company still
aims to boost output to 350,000 ounces a year despite some
delays.
Acacia Mining's shares were down 7.6% at 226 pence a share as of
1030 GMT. Edison Investment Research analyst Charles Gibson said
the company's underlying earnings missed its expectations and said
the company's dividend yield of 1% hardly makes it an income stock,
although he acknowledged that maintaining the dividend payment may
come as a relief to some investors.
The company had $233 million in cash as the end of December,
resulting in a net cash position of $105 million, down $46 million
from a year earlier.
Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
February 15, 2016 06:16 ET (11:16 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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