Acacia Mining PLC (LON:ACA) has agreed to sell its 2% net smelter royalty in the Hounde gold mine in West Africa to shore up its balance sheet after suffering cash outflows from an export ban in Tanzania.
The company said it would sell the non-core royalty in the mine, located in Burkina Faso, to Sandstorm Gold Ltd for US$45mln.
READ: Acacia in the red as CEO and CFO resign amid dispute with Tanzanian government
“Acacia’s decision to dispose of this royalty follows the announcement of commercial production at the mine in October and is consistent with our disciplined approach to capital allocation,” it said in a statement.
The deal is expected to be completed early in the first quarter of fiscal year 2018.
Acacia said it will further strengthen its balance sheet after taking measures to reduce cash flows at its Bulyanhulu and Buzwagi mines in Tanzania.
In October, the miner’s Canadian parent Barrick Gold Corporation struck a tentative deal to settle a dispute between Acacia and the Tanzania government over royalties owed on the export of gold and copper concentrates from the Bulyanhulu and Buzwagi mines.
Barrick has said a detailed proposal for review would be available during the first half of 2018.
The government had imposed a ban on the export of gold and copper concentrates in March, claiming Acacia owes royalties. The ban has taken a heavy toll on the company as it has been losing revenues and chewing through its cash pile.
READ: Barrick doubles estimate of Acacia Mining's tax bill after settlement with Tanzania
Since the export ban only applies to gold and copper concentrates, the company announced in September that it would switch to producing gold bars only at Buzwagi to restore the mine to a cashflow positive position.
Earlier that month the group said it would reduce operational activity at the Bulyanhulu mine to mitigate lost revenue.