July 21, 2017 / 1:22 PM / 2 months ago

UPDATE 1-Acacia Mining aims resume dividend if Tanzania export ban ends

* Export ban led to share price plunge

* Acacia hopes to resolve dispute in talks

* Shares plunge 10 percent (Updates throughout)

LONDON, July 21 (Reuters) - Acacia Mining aims to reinstate its dividend in early 2018 if Tanzania ends a concentrate export ban that forced the miner to abandon a payout for the first time, it said on Friday.

Shares were down 10 percent by 1226 GMT after earlier touching their lowest since February 2016 at 242 pence.

Since the ban was imposed in March the London-listed Acacia, majority owned by Barrick Gold, has nearly halved in value and is burning $10 million to 15 million of cash a month.

“We expect that following the negotiations ... there will be a resolution and we will achieve positive cash flow in the second half and, when that occurs, we would expect to announce a dividend in February,” CEO Brad Gordon told Reuters.

The Tanzanian government agreed to hold talks over the ban with Barrick but those negotiations have not yet begun.

Acacia and Tanzania are also at loggerheads over allegations of tax evasion and the government is reviewing all existing mining licences.

Acacia, which is Tanzania’s largest miner, suspended its dividend for the first time. In February, it raised its payout by nearly 150 percent for the previous financial year to 10.4 cents.

Due to the ban, full-year production is now expected to fall to the lower end of a previous guidance of 850,000 to 900,000 ounces of gold.

Acacia’s Bulyanhulu mine is the most effected by the export ban because of its size and higher running costs. Buzwagi mine is nearing the end of its life.

In the first half of the year, total production rose 4 percent to 428,203 tonnes compared to a year ago as the company mostly stockpiled its ore despite the ban.

Acacia said it could temporarily close the Bulyanhulu mine for an upfront cost of $30 million should the ban persist.

“Given the scale of the cash outflows at Bulyanhulu we do not believe that this situation is sustainable at that operation beyond the end of the current quarter,” the company said.

First-half output at Bulyanhulu fell 22 percent to 122,084 ounces. Total 2017 production is expected to fall about 10 percent.

The firm’s cash balance has fallen 80 percent to $176 million since March and 30 percent on the previous year. Acacia kept costs down by deferring payments and non-essentials, cutting them by 5 percent in the first six months of the year.

“Under the circumstances, Acacia has produced a sound operating performance with production in-line and costs,” JP Morgan said in a note.

“However, the investment case continues to be clouded by the concentrate export impasse in Tanzania, where negotiations are yet to commence and in which Acacia will take no direct part.”

Highlighting Acacia’s challenges in Tanzania, two sources told Reuters that two of the firm’s senior local employees were detained and questioned at an airport this week. Acacia said it was having trouble renewing work permits for foreign staff. (Reporting by Zandi Shabalala; Editing by Jason Neely and Edmund Blair)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below