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Acacia Mining swings to annual profit, though revenue slips

Acacia Mining said it swung to an annual profit, though revenue slipped 12% as lower production weighed on the company's efforts to capitalise on higher gold prices.

Net profit for the year through December amounted to US$59m, turning around an on-year loss of $707.0m.

Gold production was 521,980 ounces in 2018, substantially ahead of the initial production guidance of 435,000 to 475,000 ounces for the year.

But this was 32% below that of last of last year owing to the transition to reduced operations at Bulyanhulu and to stockpile processing at Buzwagi, the company said.

For the year ended 31 December, revenue fell 12% to US$664m as higher average realised gold price were offset by the lower sales base. The drop in revenue pressured earnings (EBITDA) down 12% to US$226m for year.

Gold sales of 520,380 ounces were broadly in line with production for the year.

The company said it had maintained a strong cost discipline achieving an all-in sustaining cost of US$905 per ounce sold, well below the full year guidance range of US$935 to US$985 per ounce.

At North Mara, gold production rose 4% for the year of 336,055 from a year earlier, while Bulyanhulu ooutput fell 77% to 40,485 gold ounces, above the prior year's 2,855 ounces.

Buzwagi gold production fell 46% to 145,440 ounces for the year from a year earlier but ahead of expectations due to the extended mining of the final cut of the higher grade ore with the better than expected performance of the processing plant and improved throughput as well as recoveries.

For guidance for 2019, the company said it assumes a continuation of the current operating environment with Bulyanhulu remaining on reduced operations, Buzwagi continuing to process stockpiles until early 2021 and North Mara fully operational.

'We expect 2019 production of 500,000-550,000, with production ramping up slightly in the second half of the year as North Mara comes closer to the main ore zone at the Nyabirama open pit, at an all-in sustaining cost of US$860-920 per ounce with cash costs of US$665-710 per ounce,' the company said.

'The provisional outcomes support a potential life of mine of 18 years and delivery of an average steady state production rate of 300,000 to 350,000 ounces per year at an AISC of US$700 to US$750 per ounce assuming a successful resumption of underground mining and the ability to economically produce and sell gold concentrates.'

'To that end, we continue to provide support to Barrick in its discussions with the Government of Tanzania and believe that a negotiated resolution is in the best interests of all stakeholders. '

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