Shares in the company were down by about 15 per cent earlier today before recovering somewhat to close 3.87 per cent down at 165.25p.
Acacia, which is majority-owned by Canada-based Barrick Gold, booked a $644m impairment charge due to Tanzania's ban on the export of gold and copper concentrates, which was introduced in March last year. The firm said the ban resulted in $264m of lost revenue in the year after it was forced to reduce operations at its flagship mine, Bulyanhulu.
Gold production fell seven per cent compared with 2016 to 767,883 ounces, due to lower output at Bulyanhulu.
Revenue was 29 per cent lower than the previous year at $752m.
Acacia's cash balance fell from $318m to $81m at the end of the year because of lost revenues caused by the ban.
Why it's interesting
The miner said the loss of free cash flow in 2017 has caused the board to recommend cutting the final dividend.
"Almost a year on from the announcement of the export ban imposed by the African state’s government, and with no resolution yet reached, the company’s dividend has finally been sacrificed in order to protect its financial position amid a negative cash flow in 2017," said Henry Croft, a research analyst at Accendo Markets.
Barrick Gold has said it aimed to reach a deal with the Tanzanian government in the first half of 2018, but Croft warned that even once a deal is reached, the impact on Acacia's mining capacity will be felt "long into the future".
"With every month and quarter that passes the protracted disagreement claims the support of more investors. This morning’s cutting of the dividend will be the final straw for many loyal shareholders who have stuck with the company in the hope a deal will be reached within the next five months," Croft said.
Shares in the company have fallen about 70 per cent since the ban was announced.
What Acacia said
Peter Geleta, interim chief executive of Acacia said:
Whilst we were impacted by events beyond our control, we took decisive action to stabilise our business and believe our operations are now well placed to deliver in 2018.
As expected, we will see a step-down in production in 2018 to 435,000-475,000 ounces as Buzwagi transitions to processing stockpiles and Bulyanhulu, whilst in reduced operations, solely re-processes tailings.