This year started so well for Acacia Mining (ACA). Riding high on a profitable 2016, a February update promised a sharp increase in gold production, and a drop in all-in sustaining costs. The dividend was jacked up. Mindful of parent company Barrick Gold’s (CA:ABX) appetite to sell an increasingly cash-generative business, Canada's Endeavour Mining was reportedly circling for a takeover.
Then, disaster. In March, the Tanzanian government announced a ban on exports of gold concentrate, effectively cutting Acacia off from 30 per cent of its revenue stream. Matters appeared to worsen this month when new laws increased royalty and clearing payments by a combined 3 percentage points. Acacia has agreed to satisfy the new levy under protest.
Half-year results laid bare the squeeze on the business, despite record production of 428,203 ounces. But with sales from Bulyanhulu and Buzawagi suspended, $175m (£135m) in revenue was lost, which together with a $51m VAT outflow contributed to a 45 per cent drop in the cash balance to $176m. This still came in above consensus analyst forecasts, which predict adjusted EPS of 34¢ for the December 2017 year-end, against 39¢ last year.
| ACACIA MINING (ACA) | ||||
| ORD PRICE: | 251p | MARKET VALUE: | £1.03bn | |
| TOUCH: | 250-251p | 12-MONTH HIGH: | 615p | LOW: 250p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 461¢ | NET CASH: | $91m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2016 | 505 | 102 | -1.50 | 2.0 |
| 2017 | 392 | 100 | 15.3 | nil |
| % change | -22 | -2 | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.30 | ||||
