23rd Apr 2015 07:02
LONDON (Alliance News) - Acacia Mining PLC Thursday said an increase in production in the first quarter of 2015 was offset by weaker gold prices and higher costs, which kept revenue flat and caused its pretax profit to fall.
The FTSE 250 miner based in Africa said revenue in the first quarter ended March 31 remained fairly flat from a year earlier at USD215 million as an increase in production was offset by gold prices falling by 7%.
Profit before tax fell in the quarter to USD17.4 million from USD31.3 million a year earlier as its cost of sales increased, alongside administrative and finance expenses rising.
Earnings before interest, tax, depreciation and amortization in the quarter totalled USD53 million, an 18% drop from a year earlier, also due to higher cash costs and lower gold prices.
The company said gold production totalled 181,600 ounces in the first quarter, representing an 8% rise from a year earlier, and gold sales rose by 7% to 171,415 ounces. Gold sales in the period were 6% lower than production due to "the timing of concentrate sales", the company said in a statement.
Acacia reiterated its full-year guidance of producing between 750,000 and 800,000 ounces of gold, adding that production will be second-half weighted.
Average gold prices declined to USD1,207 per ounce compared to USD1,303 per ounce a year earlier, impacting revenue and sales alongside higher cash costs.
Cash costs rose in the quarter to USD783 per ounce sold, which is 4% higher than a year earlier, but the all in sustaining cash cost fell 1% to USD1,117 per ounce. The company said its all-in sustaining cash cost should still be in the range of USD1,050 to USD1,100 per ounce for the full year.
"We saw a marginal increase in all-in sustaining cost to USD1,117 per ounce sold compared to the previous quarter, as well as a reduction in our net cash balance, due to the timing of sales as well as
several short term challenges at Bulyanhulu, principally related to the tailings reclaim and equipment availabilities," said Chief Executive Brad Gordon.
"We have addressed these issues and continued to implement a range of other operational improvements that will deliver progressive improvement at the mine over the rest of the year," said Brad Gordon.
Acacia said the Gokona underground operation is "progressing well" and on track to begin production in the second quarter. The company has now received the initial approvals for the revised environmental impact assessment required to begin underground mining operations.
"We have made good progress on the construction of the underground operation at the Gokona pit during the quarter, with a further 947 metres of development advanced, making a total of over 1,200 metres since the project commenced," said the company.
The company spent USD41 million in capital expenditure in the quarter and reported a cash balance of USD286 million, which compares to a balance of USD254 million at the end of March 2014.
Acacia also signed two earn-in agreements for projects in Burkino Faso in the period.
One is with Thor Explorations Ltd, which will allow Acacia to earn up to an 80% interest in the Central Hounde project, with an initial earn-in of 51% in return for Acacia funding exploration expenditures over a three year period and an additional 29% interest to be earned by the completion of a pre-feasibility study on a mineral resource on the project area.
The second agreement was with Canyon Resources, which will lead to Acacia earning up to a 75% stake in the Pinarello and Konkolikan projects for an undisclosed upfront payment and contributing to exploration expenditure over a two-year period.
By Joshua Warner; [email protected]; @JoshAlliance
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