Acacia loses millions in revenue due to new Tanzania mining rules

Tanzania took in some of Acacia Mining's (LON:ACA) employees and questioned them this week in an escalation of a legal dispute between the government and the mining company. Underlying earnings (EBITDA) fell 13% to US$161.4mln.

Shares in Acacia Mining were down 7.0% at 261.10 pence on Friday.

Magufuli had in mid June this year during his meeting with Barrick Gold executive chairman, John Thornton in Dar es Salaam agreed to initiate formal talks to resolve the dispute between the government and Acacia mining.

Acacia has suspended dividends as it has been unable to export gold and copper concentrates since March, due to a ban imposed by the country's Gov't.

The government has accused Acacia Mining, the country's biggest gold miner, of evading taxes worth billions of dollars by under-declaring export volume and value of its minerals. The North Mara mine, which produces exports of gold bars, remains unaffected by the ban.

ACACIA Mining is to put its Bulyanhulu gold mine on care and maintenance at the end of the current quarter under pressure of a government concentrate export ban which has seen the UK-listed group's net cash nearly halve to $90.7m as of June 30.

Andrew Wray, chief financial officer, insisted Acacia was generating enough cash to weather the storm.

Gold production rose to 428,203 ounces from 412,025 the previous year.

The company continues to expect full year group all-in sustaining costs of between US$880 - US$920 per ounce and cash cost per ounce of between US$580 - US$620 per ounce. Gold sales totalled 312,438 ounces in the period. There are also constraints on the use of off-shore back accounts and a requirement for local beneficiation and procurement. The government claims Acacia owes royalties on undeclared shipments.

Acacia has been having trouble renewing work permits for its worldwide staff in Tanzania, Chief Executive Brad Gordon told Reuters. The dispute overshadowed record first-half gold production and the company's shares tumbled by more than 17 per cent.

"As a result of the impact of the ban we are now targeting the lower end of the production guidance range of 850-900,000 ounces for 2017, but due to strong cost discipline we are leaving AISC guidance unchanged", Gordon said.