Acacia surpasses 2014 gold output forecast

[miningmx.com] – ACACIA Mining, the UK-listed gold miner which operates in Tanzania, reported gold sales of just under 704,000 ounces – a 4% improvement over its upper end guidance, and raising analysts’ expectations it could exceed 750,000 oz this year.

“Acacia now offers the potential for meaningful growth at attractive costs,” said Investec Securities in a note. “We are looking for [2015 financial year] production lifting to 779,000 oz, with cash and all-in costs falling to $720/oz and $1049/oz respectively.”

Cash and all-in sustaining costs for the 2014 financial year came in at $732oz and $1,105/oz respectively, which were 10% and 18% lower for the quarter year-on-year, and included a ninth successive quarter in which costs were lowered.

From a balance sheet perspective, the outcome for Acacia Mining is that cash holdings have been boosted $7m to $294m. The company remains fully drawn down on some $142m in debt, however.

Shares in Acacia were down just over 1% on the day, but were some 54% higher on a 12-month return basis against a 9% decline in Acacia’s average realised gold price which was $1,258/oz for the 2014 financial year.

“Acacia is being justifiably re-rated by the market, reflecting the considerable progress that has been made in turning around and optimising its operations,” said Investec.

Numis Securities described the fourth quarter performance as “solid” although it expected cash to have been increased to $316m.

The operating performance was largely attributable to “… a strong production at North Mara and the contribution of the new CIL [carbon-in-leach] circuit at Bulyanhulu. Gold production at Bugwazi, Acacia’s weakest asset, was 14% lower quarter-on-quarter in line with the firm’s stated aim of mining at reserve grade.

Gordon said in November that the company – previously known as African Barrick – had ended the first phase under his leadership.

“We are getting to the end of fixing the business and this gives us potential to do M&A,’ he said. “We are not interested in anything small; it would have to be large and transformational,’ he said, adding that a producing asset was preferable.

“It is currently one of the cheapest times to be buying assets,’ he said.