Acacia Mining doubles its dividend as revenues rise 21 per cent

 
Courtney Goldsmith
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Acacia Mining reported a strong end to a good year (Source: Getty)

Shares in Acacia Mining jumped more that seven per cent this morning as the firm more than doubled its annual dividend.

The figures

Revenue for the Tanzanian gold producer surged 21 per cent to $1bn (£798m) for the full year ending 31 December 2016 due to a 13 per cent increase in gold sales while the yellow metal's price was up seven per cent.

Adjusted net earnings rose to $161m from $7m in 2015, while earnings before interest, tax, depreciation and amortisation more than doubled to $415m.

Acacia said it will more than double its dividend for the year to 10.4c per share.

The miner said production at its Buzwagi site will increase by 40 per cent in 2017 due to a six-month extension of mining.

Shares in the FTSE 250-listed firm were up 7.17 per cent to 498p in morning trading.

Read more: London-listed Acacia Mining accused of "sophisticated tax evasion"

Why it's interesting

Acacia, formerly known as African Barrick Gold, hit a record level of production in 2016 of 829,705 ounces, which was well above its initial guidance of 750,000 to 780,000 ounces and even higher than its October revised guidance of around 820,000 ounces.

The miner was able to reduce costs by 14 per cent because of changes it made to the business in late 2015, which improved operating efficiencies and increased its production profile.

The company's strong performance was driven by its North Mara mine, which had a record year, and at Bulyanhulu, which registered its highest production in 10 years.

Read more: Analyst Views: What does Barrick’s stake sale mean for African Barrick Gold?

What Acacia Mining said

Brad Gordon, chief executive of Acacia Mining, said the firm's return to free cash generation during 2016 will allow it to be more flexible going forward.

"We continued to invest into our exploration portfolio and are poised to announce a maiden resource on the West Kenya project, in which we strategically increased our interest to 100 per cent in 2016," Gordon said.

He added: "We expect 2017, driven by the mine life extension at Buzwagi, to see further production growth and cost reductions, with production expected to be between 850,000 to 900,000 ounces at an all-in sustaining cost of between US$880-920 per ounce."

What an analyst said

"Unsurprisingly, given the full-year 2016 production results released last month, Acacia’s corresponding full-year results showed a significant improvement over 2015," said Yuen Low at Shore Capital.

"The company’s board felt able to recommend a final dividend of 8.4c a share for a total 2016 dividend of 10.4c a share. However, the recovery in the share price over the last few weeks means that this full-year dividend represents a relatively paltry yield of 1.79 per cent (based on yesterday’s closing price)."

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