Acacia Mining posts net loss of $707m for last year

13 February 2018 (Last Updated February 13th, 2018 12:44)

Acacia Mining has recorded a net loss of $707m from last year as a result of heavily reduced production in Tanzania amid an ongoing tax row with the country's government. 

Acacia Mining posts net loss of $707m for last year
Bulyanhulu mine. Credit: Acacia Mining plc.

Acacia Mining has recorded a net loss of $707m from last year as a result of heavily reduced production in Tanzania amid an ongoing tax row with the country’s government.

Last year, the government enforced a ban on exports of metal concentrate, forcing the company to reduce production at its Bulyanhulu mine.

The company registered a post-tax impairment charge of $644m and was unable to export 185,800oz of produced gold as a result of the ban.

Production from last year has seen a fall of 7% to 767,883oz compared with 2016.

Acacia Mining interim CEO Peter Geleta said: “Whilst we were impacted by events beyond our control, we took decisive action to stabilise our business and believe our operations are now well-placed to deliver in 2018.

“Our focus remains on delivering optimal performance from all aspects of the business within our control in the current operating environment, returning the business to free cash generation and delivering value for all of our stakeholders.”

“The company was served a tax demand notice of $190bn by the government of Tanzania amid allegations of illegal mining operations.”

In July last year, the company was served a tax demand notice of $190bn by the government of Tanzania amid allegations of illegal mining operations.

The tax notice involved $40bn of alleged unpaid taxes and around $150bn of penalties and owed interest.

The company expects reduced production this year to 435,000oz-475,000oz as Buzwagi transitions to processing stockpiles and Bulyanhulu solely re-processes tailings.

Acacia Mining’s majority-owner Barrick Gold has been engaged in working out a settlement with the government.

In October last year, Barrick Gold reached an agreement that covers sharing of economic benefits from Acacia’s operations with Tanzania. The agreed formula splits profits on a 50:50 basis.