Some companies look good under pressure. A superficial reading of Acacia Mining’s (ACA) first-half results highlight valiant efforts by interim chief executive Peter Geleta and his team to boost cash, reduce costs, and keep output at the top-end of the forecast range. The gold miner may be beholden to Tanzanian politicians, but at least it's generating free cash again.
Much of this is positive, but it’s all Acacia can do. Cash only rose following a $45m (£35m) mining royalty sale, gold output fell 41 per cent on the 2017 comparable, and managing “through the current uncertainty in the operating environment” represents little more than a holding pattern. The company is still reliant on majority shareholder Barrick striking a deal with the government of John Magufuli, a president who just declared his party will be “in power forever, for eternity”.
Still, these results provided insight into Acacia’s views of its own position and market discount. Were it bullish, you might expect any spare cash to be used for share buybacks. But spare cash and optimism are in short supply; assets remain impaired to reflect a proposed 16 per cent free carry interest for the state, and the fair value of Acacia’s cash-generating units still entertains the idea of “a sale transaction on an arm’s length basis”.
On average, analysts expect adjusted pre-tax profits of $131m and EPS of 23.5¢ this year, down from $141m and 35.7¢ in 2017.
| ACACIA MINING (ACA) | ||||
| ORD PRICE: | 117p | MARKET VALUE: | £479m | |
| TOUCH: | 116-117p | 12-MONTH HIGH: | 285p | LOW: 105p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 281¢ | NET CASH: | $63.3m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 392 | 99.5 | 15.3 | nil |
| 2018 | 333 | 56.7 | 7.5 | nil |
| % change | -15 | -43 | -51 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.30 | ||||
