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Alberto Abaterusso
Alberto Abaterusso
Articles (1661) 

Acacia Soars on 1st-Quarter Production Results

Gold production in the first quarter was lower on a year-over-year basis, but on par with the company's predictions

April 12, 2018 | About:

Acacia Mining (ACA.L) soared 2.73% to $1.97 on the London Stock Exchange on the heels of production results for the first quarter of 2018.

The miner, a subsidiary of Barrick Gold Corp. (ABX) in Africa, reported a 45% decrease on a year-over-year basis to 120,981 ounces of gold produced in the first three months of 2018. In the first quarter of 2017, Acacia Mining produced 219,620 ounces.

The decline in the production of the yellow metal was a result of the company’s decision to shift Bulyanhulu’s operations at a reduced pace and to process the stockpile at Buzwagi mine.

The decision of Acacia Mining followed the imposition of a ban on the trade abroad of copper concentrates by the Tanzanian government. That was because Acacia Mining was charged for underreporting revenues in Tanzania.

At North Mara, the production went also down because of lower grades of ore processed and encountered during mining activities.

However, the first quarter production was on par with the company’s guidance.

In addition, because of timing shipment reasons during the quarter, Acacia Mining sold a lower than produced volume of gold. The miner placed on the gold market 116,955 ounces of the precious metal.

Interim CEO Peter Geleta expressed his satisfaction for the first quarter production results and added the following: “We are pleased to record an increase in our cash balance to US$107 million, driven by the sale of a non-core royalty that completed in January 2018, which helped to further stabilize our balance sheet.”

During the quarter, Acacia mining also refunded the carbon-in-leach debt facility with an additional $14 million.

For full fiscal 2018, Acacia Mining expects a gold production of 435,000 to 475,000 ounces.

The earnings announcement for the first quarter of 2018 is scheduled for Thursday, April 19.

Acacia Mining is down-trending and lost 32.4% so far this year. The gold stock has underperformed the Van Eck Vectors Gold Miners ETF (GDX) by 30.3%.

The stock in Acacia Mining (ACA) has a market capitalization of $808.64 million. The 52-weeks range is $1.84 to $7.21.

The price-book ratio is 49.05 times and the EV-to-Ebitda ratio is 1.96 times. The Ebitda margin is at 40.3% versus an industry median of 25% for the 52-weeks through Dec. 30, 2017.

The recommendation rating is 2.8 out of a total of 5. The average target price is $2.72. That is a mean of 18 estimates, which range between a low of $1.98 and a high of $4.07.

(Disclosure: I have no positions in any security mentioned in this article.)

About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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