Embattled Acacia Mining ends painful year with $700-million loss

Acacia Mining (LON:ACA), Tanzania's No.1 bullion producer, has scrapped its 2017 dividend after a long-running dispute with the government of the East African nation cost the company $700 million in annual loss.

The company, majority owned by Barrick Gold (TSX, NYSE:ABX), also said its gold output would drop in 2018 as a result of the ongoing ban on exports of metal concentrate, which represent about a third of Acacia’s output.

Delivering preliminary 2017 results, Acacia noted that full-year earnings before interest, tax, depreciation and amortisation (EBITDA) plunged 38% to $257 million, as it had to take a $644 million impairment charge.

Shares tumbled to a four-year low on the news, trading down 17% to 142.45 pence on Monday, the lowest since October 2013. In just a year, the stock has fallen 69%.

Acacia, which is awaiting a final agreement between Barrick and Tanzanian president John Magufuli to resume exports, has faced government pressure since March last year, when the ban on concentrates came into effect.

Shortly after, it faced a series of accusations, including tax evasion and illegal operations, which prompted authorities to question staff and even block one of the firm’s senior executives from leaving the country in one occasion.

To make things worse Magufuli served Acacia in July with a $190 billion tax bill.

Further hurdles, including permit issues and curtailed operations at its main Tanzanian mines hit Acacia’s output in the second half of 2017.

Barrick decided to intervene in hopes of reaching an agreement with authorities and leave any differences behind. A deal was reached in October, but the gold giant is still working out final details of the agreement, which could allow Acacia, in which Barrick has a 64% stake, to restart exports this year.

More to come…

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