With continued US dollar strength and a faltering Chinese economy, these are nervous times for gold miners. The challenges facing the industry are reflected in a 63 per cent fall in half-year earnings for Acacia Mining (ACA). The Tanzania-focused miner, formerly known as African Barrick Gold, managed to sustain revenue at 2014's half-year level despite a fall in gold prices. But an increase in costs put a dent in gross profits, while a sharp drop in the value of the Tanzanian shilling against the greenback fed through into around $15.2m (£9.8m) in foreign exchange losses.
Acacia said it produced 367,301 ounces of gold in the first half, up 6 per cent on 2014, which helped offset a weakening gold price. Costs, however, were on the rise due to increased investment in its Bulyanhulu and North Mara mines. Management are pleased with the operational progress at these two sites, which should underpin a step-up in tonnage, ore grades and cash flows as 2015 progresses. This was borne out by second-quarter sales of $231.9m as gold output climbed 4.2 percent to 185,641 ounces. Management reaffirmed mid-range guidance of 775,000 ounces of gold this year at an all-in sustaining cost of $1,075 per ounce. This compares with 718,651 ounces of gold at $1,105 apiece during 2014.
Broker Panmure Gordon estimates full-year EPS of 9.3¢, against 22.1¢ in 2014.
| ACACIA MINING (ACA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 236p | MARKET VALUE: | £968m | |
| TOUCH: | 236-237p | 12-MONTH HIGH: | 319p | LOW: 192p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 488¢ | NET CASH: | $145m | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 446 | 62.2 | 9.6 | 1.4 |
| 2015 | 447 | 25.0 | 3.6 | 1.4 |
| % change | - | -60 | -63 | - |
Ex-div:27 Aug Payment:25 Sep £1 = $1.55 | ||||
