Gold. Picture: REUTERS
Gold. Picture: REUTERS

London — Acacia Mining beat forecasts on Monday with figures for  production and costs in 2018 that lifted the gold miner back into profit, but the company is still grappling with a long-running tax dispute in Tanzania where it operates all its mines.

The share price of Acacia, majority owned by Barrick Gold Corp, was steady while the rest of the market rose, finding little impetus despite reporting gold output of 521,980oz at a cost of $905/oz. 

Both figures were lower than 2017 but ahead of expectations.

“Financials for Acacia remain somewhat of a sideshow due to the ongoing negotiations between parent Barrick and the government of Tanzania,” said RBC analyst James Bell.

The stock is still up more than 50% since September when Barrick said it was buying Randgold Resources and when Mark Bristow was named as CEO,  taking over as head of the merged entity from January.

Acacia’s gains were fuelled by expectations that Bristow, who has broad Africa experience, could reach a deal with Tanzania.

Acacia has cut output by a third since the government banned the export of mineral concentrates in 2017 after accusing the firm of tax evasion. Acacia denies the charges.

Peter Geleta, interim CEO of Acacia, said talks with Tanzania were progressing, but did not give details.

“Clearly there is momentum in the discussions and we are receiving feedback from the Barrick guys that negotiations are progressing well,” he said. Barrick had been unable to hold direct talks with Acacia.

Last week, Bristow declined to put a timeline on talks with Tanzania. Barrick’s head of Africa and Middle East operations, Willem Jacobs, is leading talks.

Geleta said Acacia wanted to secure a negotiated settlement, but was also working on international arbitration, which he said was “never the preferred option”. He said arbitration could offer an outcome by the end of 2019.

“Whatever settlement is reached needs to deal with the historical issues but it also needs to set the rules of the game going forward,” Geleta said. He hoped  this would include repayment of VAT, which it put at $179m.

Acacia said it expected production to be 500,000oz-550,000oz in 2019,  at a cost of $860-$920 an ounce.

Basic earnings per share totalled 14.4c compared with a loss of 172.5c  a year earlier, while earnings before interest, tax, depreciation and amortisation (ebitda) was $48m in the fourth quarter, in line with expectations.

“They delivered a very good set of set of results operationally and 2019 promises more of the same,” Investec analyst Hunter Hillcoat said. “They are doing well, all things considered.”

Reuters