23rd Apr 2015 10:03
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-listed 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 a 7% decline in gold prices.
Profit before tax fell to USD17.4 million, from USD31.3 million a year earlier, as its cost of sales increased, alongside higher administrative and finance expenses. Earnings before interest, tax, depreciation and amortization fell 18% to USD53 million, 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 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 an ounce compared with USD1,303 an ounce a year earlier, hitting revenue and sales.
Cash costs rose 4% to USD783 per ounce sold, although the all-in sustaining cash cost fell 1% on the year to USD1,117 an ounce, marginally higher than the all-in cost of 1,105 an ounce it reported for the whole of 2014. The company said its all-in sustaining cash cost should still be in the range of USD1,050 to USD1,100 an ounce for whole of 2015.
"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," the CEO said.
It was a similar story for the company's copper production, its secondary operation, which also experienced a rise in production and sales but lower prices. Copper production totalled 3.5 million pounds, up from 3.0 million pounds a year earlier, whilst sales reached 2.8 million pounds from 2.5 million pounds, but average prices fell to USD2.47 a pound from USD2.96 a year earlier. Copper cash costs remained flat.
Acacia said the Gokona underground operation is "progressing well" and is 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.
During the quarter, Acacia spent USD41 million in capital expenditure, 26% lower than a year earlier as the company had fewer expansionary requirements and reported a cash balance of USD286 million, which compares with 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 first quarter.
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 two years.
Acacia shares were up 0.3% to 274.77 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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