Congo’s South Kivu governor suspends mining operations in province
The decision will hit artisanal miners of metals such as gold and tin hard, as they are the region's dominant producers.
Acacia Mining (LON:ACA), Tanzania’s No.1 gold producer, reported Friday a dramatic revenue drop in the third quarter, as it awaits further clarification on the deal reached Thursday between majority owner Barrick Gold (TSX:NYSE:ABX) and the east African nation.
Barrick said yesterday that Acacia would pay Tanzania $300 million and hand the government a 16% stake in three of its gold mines, as part of the agreement aimed at ending disputes affecting the company’s operations, which in turn have hit the Canadian gold giant’s production.
But Acacia restated Friday that no formal proposal has been put forward for consideration. It added that since it was not directly involved in the negotiations between Barrick and Tanzania, any potential agreement would have to be approved by its own shareholders.
Miner said it can’t make an upfront $300 million payment as Barrick promised the Tanzanian government.
The gold producer has faced government pressure in Tanzania since March, when President John Magufuli imposed a ban on gold concentrate, which represents about a third of the company’s output.
Further hurdles, including permit issues and curtailed operations at its main mines in the country hit Acacia’s output in the three months to September.
Gold production in the period fell 8.3% to 191,203 ounces compared to the previous quarter, while capital expenditure decreased to $35.6 million.
Revenue dropped to $171 million (£131m), while earnings before interest, tax, depreciation and amortisation fell 60% to $50 million, mostly due to lower sales.
Acacia shares slipped 3.7% having climbed Thursday on news of the deal, before falling again as investors sought more clarity on the details.
“While progress appears to be being made, there are still significant uncertainties, as evidenced by the market’s yo-yo reaction to yesterday’s news,” analysts at Investec said in a note.
The company itself clarified it doesn’t have the ability to make an upfront $300 million payment.
“Barrick is equally aware of our balance sheet as we are,” Acacia’s Chief Financial Officer Andrew Wray told Bloomberg.
Comments
PRINCE A D GAISIE
It was Barrick team that did the negotiation so the $300 million front payment which ACACIA is claiming they do not have is not clear .It is Barrick which has about 2/3 of ACACIA stake so they are driving the Agenda. The bigger pocket is coming from Barrick and not ACACIA so they should try to murder the mother waters with such intrusion when they could stand the pressures from Tanzania Government.