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Acacia pulls back from major gold mine amid Tanzania export ban dispute
Acacia Mining has said it will slow down operations in its flagship mine in Tanzania as it desperately tries to cope with an export ban on gold and copper ore.
The FTSE 250 company has been locked in a bitter dispute with the Tanzanian government over the ban, which came into effect in March.
It has now lowered its production guidance for the mine, where it said the 2,000-strong workforce will be “significantly reduced” and the processing of underground ore will stop within four weeks.
The news sent Acacia shares plummeting by 9pc to 188p in early trading, although they later recovered to 200p.
Acacia said around 35pc of its production this year has been affected by the ban, prompting the company to scramble to mitigate against the lost revenue.
“The impact of the ban, in addition to the deterioration of the current operating environment, has led to negative cash flow of approximately $15m (£11.6m) per month at the mine and thus has made ordinary course operations at Bulyanhulu unsustainable.
“Acacia has therefore decided to commence a programme to reduce operational activity and expenditure at Bulyanhulu in order to preserve the viability of our business over the longer term.”
The company said it now expects annual production to be 100,000 ounces lower than the bottom end of the previously guided range of 850,000 to 900,000 ounces.
It said it will keep hold of all assets and equipment for the mine so it can resume operations if the export ban were to be lifted.
Its other mine affected by the ban, the Buzwagi mine, will continue to operate as normal “for the time being”, Acacia said.
Acacia suffered a terrible few days in late July in which one of its senior employees was prevented from leaving Tanzania as part of a dispute with the Tanzanian government over a £145bn tax bill.
President John Magufuli has said his country is not receiving a fair share of the mining industry’s profits.
Acacia said it “shares the government of Tanzania’s goals of enhancing the country’s social and economic development”, adding that discussions are ongoing between the government and Acacia's majority owner Barrick Gold.