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Acacia to reduce activity at Bulyanhulu

04 September 2017 08:23

Acacia Mining is to reduce operational activity at the Bulyanhulu mine following Tanzania's export ban on gold/copper concentrate.

Acacia said that since the ban was imposed on 3 March, impacting approximately 35% of year to date group production, the company had seen a build-up of approximately US$265 million of concentrate inventory in Tanzania, based on current prices.

It said that to help to mitigate the lost revenue, Acacia had taken a number of actions to reduce operating and capital costs in order to protect jobs and its supplier base, both of which were predominantly Tanzanian.

it said that despite these actions, the loss of revenue, together with an outflow of approximately US$65 million of indirect taxes and costs from other changes to the operating environment, had led to a significant cash outflow of approximately US$210 million in 2017 year to date.

Accordingly, as part of Acacia's interim results, it announced that it would need to consider reducing operational activity and expenditure at the Bulyanhulu mine if the concentrate ban was not lifted by the end of Q3 2017.

It said: "The impact of the ban, in addition to the deterioration of the current operating environment, has led to negative cash flow of approximately US$15 million per month at the mine and thus has made ordinary course operations at Bulyanhulu unsustainable.

"Acacia has therefore decided to commence a programme to reduce operational activity and expenditure at Bulyanhulu in order to preserve the viability of our business over the longer term.

"This programme will include the preservation of all assets and equipment to enable the mine to resume ordinary course operations should the export ban be lifted and the operating environment stabilised.

"In the meantime, discussions between Barrick and the Government of Tanzania are on-going."

Acacia said it continued to support the discussions and still believed that a negotiated resolution was the best outcome for all stakeholders. At 8:23am: (LON:ACA) Acacia Mining Plc share price was -15.85p at 191.25p

Story provided by StockMarketWire.com

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