21st Apr 2016 06:55
LONDON (Alliance News) - Acacia Mining PLC on Thursday said its profit rose in the first quarter of 2016 after the company countered lower gold prices by increasing production and improving its margin through cost reductions.
The miner, which produces gold from three mines in Tanzania, said revenue in the first quarter of 2016 amounted to USD221.0 million, whilst earnings before interest, tax, depreciation and amortisation totalled USD66.0 million.
That revenue was 3% higher than the previous quarter thanks to a rise in gold sales whilst Ebitda was 24% higher quarter-on-quarter as Acacia began to benefit from lower cash costs. Operational cashflows were also up 11% to USD52.0 million, driven by that rise in Ebitda.
That allowed Acacia's pretax profit in the quarter to rise to USD27.8 million from the USD17.4 million booked in the last quarter of 2015 - a welcome trend following Acacia's USD124.2 million pretax loss for the whole of 2015.
However, Acacia made an ultimate net loss of USD52.4 million in the period, turning from a USD9.2 million profit in the last three months of 2015. Acacia said the loss was mainly caused by additional tax provisions of USD70.0 million.
Stripping out those provisions and other items, Acacia's adjusted net earnings managed to rise to USD18.1 million from USD10.6 million.
The additional tax provisions follow on from the miner signing a memorandum of understanding with the Tanzanian Revenue Authority earlier this year, and Acacia said it has made a USD10.0 million prepayment toward corporate tax during the first quarter.
Acacia's cash balance stood at USD237.0 million at the end of March and its net cash position rose to USD124.0 million.
Those financial results were thanks to a 5% quarter-on-quarter rise in gold production to 190,210 ounces and a 7% lift in gold sales to 184,181 ounces. Notably, sales are lagging production, meaning Acacia's inventory will have increased.
However, gold prices in the first quarter were still lower than the previous quarter at an average of USD1,150 per ounce compared to USD1,207 per ounce.
Countering that, Acacia lowered its cash costs significantly, as the all-in sustaining cash cost fell to USD959 per ounce from USD1,117 per ounce, significantly improving its margin.
Acacia Chief Executive Brad Gordon said the first quarter was Acacia's "best cost performance since 2010", adding that all three of its major operations performed ahead of expectations.
Capital expenditure in the quarter cost Acacia over USD36.0 million, which is down compared to the USD42.6 million spent in the final stages of 2015. To put the expenditure into further context, the entire budget in 2015 amounted to USD183.6 million.
By Joshua Warner; [email protected]; @JoshAlliance
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