Acacia loses millions in revenue due to new Tanzania mining rules

 
Courtney Goldsmith
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Gold bars are seen at the Czech Central
The gold miner has been locked in an ongoing dispute with the Tanzanian government (Source: Getty)

Troubled gold miner Acacia Mining's shares tumbled as its financial performance was "significantly" hit by the company's ongoing row with the Tanzanian government in the interim period, resulting in around $175m (£135m) of lost revenue.

The figures

Revenue for the six months to 30 June was 22 per cent lower than the previous year at $391.7m.

Pre-tax profit in the first half fell to $99.5m from $101.6m in 2016.

The firm has continued to operate at its Bulyanhulu and Buzwagi mines, which have been affected by the government's ban on metal concentrate exports, leading to a build-up of approximately 127,000 ounces of gold concentrate and 8.3m pounds of copper concentrate

As a result of negative cash flow, no interim dividend has been declared.

Shares were down 10.24 per cent to 252.06p in morning trading.

Read more: Acacia digs in for long-haul over Tanzania mining reforms

Why it's interesting

Acacia, Tanzania's largest gold miner, has been hard hit by President John Magufuli tough new restrictions for the mining sector. The company's share price has nearly halved since the ban on concentrate exports was first announced in March.

In a bid to settle the row, it has served notices of arbitration on behalf of its Bulyanhulu and Buzwagi mines.

The miner has also been accused by the country of hiding exports and underpaying the government by tens of billions of dollars, which it has repeatedly denied.

Acacia said its Bulyanhulu mine, which accounts for the majority of the cash flow losses, will be shut down at the end of September at a cost of $30m if no resolution to the export ban is found.

What Acacia Mining said

Brad Gordon, chief executive of Acacia Mining, said:

The first half has posed significant challenges to our operations in Tanzania following the introduction of the concentrate export ban in March and I am pleased with how we have performed in light of this.

We continue to take steps to preserve long-term shareholder value and have served arbitration notices for our Bulyanhulu and Buzwagi mines and will work to achieve a negotiated resolution, which is the preferable outcome for all parties.

Read more: Acacia agrees to comply with higher royalties tax in Tanzania mining row

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