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Acacia liberates cash-flows

Acacia Mining has posted a strong set of full-year numbers, underpinned by continued progress on the cost front.
February 16, 2015

Despite lower realised gold prices, Acacia Mining (ACA) boosted full-year cash profits by 5 per cent to $253m (£164m). Continued progress on the cost front enabled the Tanzania-focused miner to generate free cash-flow from the second quarter onwards. This was not only ahead of schedule, but the first time in three years that this had been achieved.

IC TIP: Hold at 270p

Costs are being pared back due to increased mechanisation within Acacia's mining complex, specifically at the Bulyanhulu mine, where a method known as 'long-hole stoping' has replaced traditional labour-intensive practices. The switch has helped to bring down labour costs, highlighted by a steep fall in the number of costly expatriates employed by the miner. All-in sustaining costs (AISC) were reduced by nearly a fifth to $1,105 an ounce. That's well below the industry average, but Acacia's chief executive, Brad Gordon, said that it is still on the way down. Capital expenditure, at $254m, was down by a third on the prior year owing to revised mine plans and improved capital controls. Guidance for the current year is $220m-$240m.

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