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Acacia Mining production steadies after Tanzania disruption

Group gold production for the quarter to June dropped 36% to 133,778 ounces
gold and dollars
The root of the dispute

Acacia Mining PLC’s (LON:ACA) production fell sharply again as the row with the Tanzanian government over unpaid royalties continued to simmer.

Group gold production for the quarter to June dropped 36% to 133,778 ounces as operations at two its three mines - Bulyanhulu and Buzwagi – were scaled back.

At Buzwagi, gold production fell 44% to 37,415oz as lower grade ore stockpiles were processed as mining from the pit came to an end. At Bulyanhulu, all gold production continued to be from the retreatment of tailings with gold production 82% lower at 10,443 ounces. The third mine, North Mara, saw gold production rise during the quarter by3% to 85,920oz due to higher grades from Gokona Underground.

Peter Geleta, Acacia’s interim chief executive, said the group was on target to hit the top end of its 435,000-475,000oz forecast for 2018.

Gold sold was 134,090oz during the June quarter while net cash rose to US$63mln. 

Broker Shore Capital noted second quarter production was up slightly up on the first three months while the rise in net cash was encouraging.

Export ban

The Tanzania government has banned Acacia from exporting gold and copper concentrates, claiming it is owed royalties from Bulyanhulu and Buzwagi.

In response, the miner has cut back operations and switched to producing gold bars.

Canadian giant Barrick, which owns 63.9% of Acacia, is in talks with the Tanzanians over a final settlement of the dispute.

In October last year a framework agreement was proposed that would see Acacia make a payment of US$300mln to the Tanzania government and share the economic benefits from its mining 50/50 going forward.

Last month, Barrick said discussions were continuing there was no timetable for finalisation of a deal, which also needs to be agreed by the board of Acacia.

Shares in Acacia, which have lost 75% of their value over the past two years, dropped 1% to 132p.

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