ABX Barrick Gold Corp. (BC) (delisted)

   By Alex MacDonald 
 

LONDON--Acacia Mining PLC (ABGLY) shares rose after Tanzania's largest gold miner said on Thursday it has returned to cash generation in the fourth quarter because of higher gold output and forecast even higher output next year as it continues to develop its flagship Bulyanhulu mine.

The U.K.-listed miner, formerly known as African Barrick Gold PLC, said it produced 200,723 troy ounces of gold in the three months ended Dec. 31, 2015, up 11% from the same quarter a year ago on increased output from Bulyanhulu and higher grades mined at its North Mara mine.

This contributed to a 1.8% rise in full-year gold output to 731,912 ounces, slightly ahead of its lowered guidance for output on par with the previous year.

"We continue to focus on reducing our cost base to ensure our assets are able to generate free cash flow in the current gold price environment," said Acacia's Chief Executive Brad Gordon.

Acacia Mining managed to boost output amid a broader cost-cutting effort that included 1,050 job losses, equivalent to about 27% of its workforce, as it seeks to boost cashflow amid a protracted slump in the gold price.

The company has focused on mechanizing its flagship Bulyanhulu mine and improving the operational performance of its North Mara and Buzwagi mines as it grapples with a gold price hovering at around $1,103 an ounce as of Thursday, far below peaks of recent years including an intraday high of $1,907 an ounce in 2011.

The company has also cut its capital expenditure while its executive management and board members have voluntarily agreed to cut their salaries by 10%.

The company's cost-cutting efforts are bearing fruit with its all-in sustaining cash cost dropping 7.7% on year to $1,004 an ounces in the fourth quarter, Acacia said. Full-year all-in sustaining costs rose 0.6% to $1,112 an ounce, but the miner expects this to fall to around $950 to $980 an ounce this year with an increase in gold production to 750,000 to 780,000 ounces.

"We [will] still add cash to the balance sheet at under $1,000 an ounce," said Mr. Gordon in a phone interview with The Wall Street Journal.

At 1123 GMT, Acacia's shares were up 6.2% at 171.9 pence a share. Canaccord Genuity analyst Nick Hatch said Acacia's 2015 output was ahead of the firm's revised guidance, while the 2016 output guidance has been lowered from a target of 850,000 ounces of gold this year announced in November.

Mr. Gordon said the figure was lowered after the company decided to do more analysis on the upper east zone of the Bulyanhulu mine given the lower gold price.

"We could have pushed on and mined it, but with the focus on free cashflow we decided to pull out of it...until we have more information."

Mr. Gordon said the company remains committed to its policy of paying out 30% of its free cash flow as dividend.

The company remains open to acquisitions if the right opportunity presents itself but for now the company remains focused on its improving its existing operations.

Write to Alex MacDonald at alex.macdonald@wsj.com

(END) Dow Jones Newswires

January 21, 2016 07:17 ET (12:17 GMT)

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