Despite issues in Tanzania, first-quarter operations were resilient, according to Acacia Mining (ACA.L).
However, the miner closed the quarter with a 33% year-over-year decline in revenues to $157 million, a nearly 47% drop in adjusted earnings before interest, taxes, depreciation and amortization to $43.804 million, and a 73% slump in adjusted net income to $7 million.
These results will likely affect the market value of Acacia on the London Stock Exchange over the coming trading days.
Acacia Mining is trading at $2.21 per share. The stock in the London-headquartered mining company is up-trending again since the beginning of the week, however, it has lost 24.13% so far this year.
Over the same span of time, the gold stock has underperformed the Van Eck Vectors Gold Miners ETF (GDX) by 21.6%.
The adjusted net profit per share was $1.7 cents in the first quarter versus $6.5 cents reported by Acacia Mining in the prior-year quarter.
Acacia Mining is a subsidiary of Barrick Gold Corp. (ABX, Financial) in Africa. Barrick Gold Corp has 63.9% interest stake in Acacia.
Results on sales and earnings are still being affected by the Tanzanian imposition of export ban on copper concentrates. The measure was taken because Acacia Mining underreported revenues in the African country.
As a response, Acacia Mining is seeking for balance sheet stabilization through a revision in the operational plan at each mine and the sale of non-core assets.
The sale of a non-core royalty in the quarter determined a 32% increase in cash on hand and securities to $107 million from the previous quarter.
Revised plans at operations put the company “in a good position to deliver against full year guidance of 435,000-475,000 ounces at an AISC of US $935-985 per ounce,” said Interim CEO Peter Geleta.
Geleta added that Acacia Mining continues “to provide support to Barrick in its on-going discussions with the government of Tanzania.”
In the first quarter of 2018, Acacia produced 120,981 ounces of gold, a 45% decrease from a year ago, and at an all-in sustaining cost (AISC) of $976 per ounce of metal sold. The AISC was $934 per ounce of metal sold in the comparable of 2017.
Acacia’s decision to shift Bulyanhulu’ operations at a reduced pace and to proceed with stockpile processing at Buzwagi mine affected the quarterly production of the yellow metal. Also, North Mara had influence with its lower grades of ore mined. However, the first quarter production was on par with the company’s guidance.
In addition, for timing shipment causes, sales volume went also down at Acacia Mining in the quarter. The miner placed on the gold market 116,955 ounces of the precious metal versus a sales volume of 184,744 in the comparable of 2017.
The stock in Acacia Mining (ACA) has a market capitalization of $906.34 million. The 52-weeks range is $1.85 to $6.47. According to GuruFocus, the price-book ratio is 0.77 times. The industry has a P/B ratio of 2.06 times.
The recommendation rating is 2.8 out of a total of 5.
(Disclosure: I have no positions in any security mentioned in this article.)
