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Acacia lowers FY guidance on lower Q3 gold output

6th October 2015

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – London-listed Acacia Mining has lowered its production guidance for the 2015 financial year after lower-than-expected output for the third quarter of the year.

The company expected 2015 gold production from its Tanzanian assets to stay at the 2014 level of around 718 000 oz – well short of the initial guidance of 750 000 oz to 800 000 oz.

This followed several negative “short-term factors” at the Bulyanhulu and Buzwagi operations during the three months to September that resulted in a drop in output to 164 000 oz from the 190 986 oz achieved in the corresponding quarter in the prior year.

The lower levels of production resulted in the cash cost per ounce sold and all-in sustaining cost (AISC) per ounce sold rising above $800/oz and $1 200/oz respectively in the quarter.

“I am personally very disappointed in the operational performance in the third quarter, which saw a succession of small issues impact Buzwagi and the ramp-up at Bulyanhulu,” said Acacia CEO Brad Gordon.

However, with the issues now having been mitigated and the “key underlying metrics” at Bulyanhulu, such as underground development rates, mining widths and stope availability, on track to sustain a step-up in production in the fourth quarter, Acacia expected the next three months to deliver a stronger performance.

Production increases were expected at all three of Acacia’s Tanzania-based mines, with cash costs and AISC to be around 5% above the initial respective guidance ranges of between $675/oz and $725/oz and between $1 050/oz and $1 100/oz respectively for the full year.

The group initially aimed to bring the AISC below $1 000/oz by the fourth quarter of 2015.

“In light of the lower gold price environment, we are redoubling our efforts to further remove costs from the business in order to return to free cash generation. These initiatives will also be incorporated into yearly life-of-mine planning, which is currently under way,” Gordon said.

Following delays in opening new high-grade long-hole stopes at Bulyanhulu, which led to lower ore tonnes mined than planned and reduced head grade together with lower plant recoveries, production reached around 62 000 oz, with run-of-mine production of 55 000 oz and reclaimed tailings production of 7 000 oz.

At Buzwagi, production of about 34 000 oz for the quarter was impacted by the mining of lower-than-planned grades and reduced mill throughput as a result of extended crusher downtime in September and an unplanned semiautogenous grinding mill reline.

At North Mara, production of around 68 000 oz was in line with Acacia’s expectations.

Edited by Creamer Media Reporter

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