Tanzania - Tanzanian gold producer Acacia Mining will have to review its mining operations if the government’s ban on gold and copper ore exports remains in place, a senior executive said on Thursday.
Shares in Acacia, which is majority-owned by Barrick Gold, briefly touched a six-week low, paring losses by 9am to trade down 3.7 percent after it said first quarter core profits rose 25 percent to $82 million (R1.07 billion) but cash flow was reduced by $36 million in part due to the ban.
The government halted the export of unprocessed ore on March 3, following President John Magufuli’s call for the construction of more gold smelters in the country, Africa’s fourth-largest gold producer.
“If we get to a point where it’s a pure stalemate and we don’t see that dialogue there, then we are going to have to reappraise,” chief financial officer Andrew Wray said, adding negotiations continued.
Non-essential spending in the quarter was pushed back in response to the ban and the company would have to “really take stock if it makes sense to continue producing given the cash burn”, Wray said.
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The export ban effects two of its three mines and the company said it would reassess the ongoing operation of both “over the coming weeks”.
“Clearly the message to the government is to sort this out or people are going to lose jobs [and the government royalties],” Investec analysts said.
Acacia’s gold production in the first quarter totalled 219 670 ounces, however, sales were lower by 34 926 ounces.