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Alberto Abaterusso
Alberto Abaterusso
Articles (1432) 

Acacia Mining Closes Out 2018 With Lower Gold Output

Although the AISC increased, the miner recorded positive cash flows

February 11, 2019 | About:

Before the opening bell on Monday, Acacia Mining PLC (LSE:ACA) 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) by 14.1%.

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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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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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