Acacia Mining is set to decrease operational activity and expenditure at Bulyanhulu mine in Tanzania if the country's concentrate export ban is not lifted by the end of the third quarter of this year.
Mining authorities in Tanzania imposed the gold/copper concentrate export ban in March, which has affected an estimated 35% of Acacia’s group production for the year so far, leading to a build-up of around $265m of concentrate inventory in the country.
Despite taking several measures to help to mitigate the lost revenue, the company has had a significant cash outflow of around $210m so far this year.
Furthermore, the impact of the ban has led to negative cash flow of around $15m a month at the Bulyanhulu mine, causing ordinary course operations at the mine to become unsustainable.
Acacia’s latest move to start a programme to reduce operational activity and expenditure at Bulyanhulu is aimed at preserving the viability of its business over the longer term.
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As part of the programme, all assets and equipment will be preserved to enable the mine to resume ordinary course operations in case the export ban is lifted.
Underground activity at Bulyanhulu will be halted and the processing of underground ore is planned to cease within four weeks.
The implementation of this programme is expected to lead to a reduction in the workforce from the existing 1,200 employee and 800 contractor roles.
The process of moving to a reduced operational state is scheduled to be completed within three months and will include one-off costs of $20m-$25m, alongside the natural unwinding of around two months of working capital.
Due to the planned reduction in operating activity at the mine, annual production is expected to be around 100,000oz less than the previous lowest guidance range of 850,000oz-900,000oz, Acacia said.