Before the opening bell on Monday, Acacia Mining PLC (LSE:ACA, Financial) released its financial results for full fiscal 2018.
Acacia Mining reached a gold output of 521,980 ounces, topping guidance of 435,000 to 475,000 ounces. The London-based miner recorded an all-in sustaining cost of $905 per ounce of metal sold versus expectations ranging between $935 and $985 per ounce.
On a year-over-year basis, gold production tumbled 32% and the AISC jumped 3.4%. Acacia's performance was impacted by reduced operations at the Bulyanhulu mine and low gold grades processed at the Buzwagi mine.
As a result of a lower volume of gold produced in 2018, the miner placed on the gold market a lower sales volume of 520,380 ounces, reflecting a 12.2% decrease year over year. Thus, total revenues decreased 11.7% to roughly $664 million, adjusted earnings fell 70% to $10.8 per share and adjusted earnings before interest, taxes, depreciation and amortization plunged 41% to $183 million. At 27.6%, the adjusted EBITDA is slightly above the industry median of 24%.
As a result of the positive free cash flow generated over the past three quarters through Dec. 31, Acacia Mining closed 2018 with an $88 million net cash position.
Acacia has guided gold production between 500,000 ounces and 550,000 ounces for 2019. It expects the precious metal will be produced at an AISC of $860 to $920 per ounce of metal sold and the cash cost will range between $665 and $710 per ounce.
The closing share price was 1.92 British pounds ($2.49) on Feb. 8, for a market capitalization of about $1.02 billion. For the 52 weeks through Friday, the stock gained more than 16%, outperforming the VanEck Vectors Gold Miners ETF (GDX, Financial) by 14.1%.
The 52-week range is 0.94 pounds to 2.11 pounds. The 14-day relative strength index of 55 suggests the stock is neither overbought nor oversold.
As a result of a ban on the export of gold concentrates and continued negotiations with the government of Tanzania, where the company operaties, the board of directors has decided to not distribute a dividend for 2018.
The recommendation rating is to hold the stock. The average target price is 1.82 British pounds.
Disclosure: I have no positions in any securities mentioned.
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