Acacia warns of possible earnings impact of weak shilling
JOHANNESBURG (miningweekly.com) – If the current weakness of the Tanzanian shilling against the US dollar prevails until June 30, it will impact the end-of-quarter revaluation of Tanzanian shilling-denominated indirect tax balances owed to Tanzania-focused Acacia Mining.
The tax balances were converted to dollars for reporting purposes.
The outstanding Tanzanian shilling-denominated indirect tax balance, both long term and short term, was about $124-million at the beginning of the second quarter and, excluding the impact of currency, had not materially moved during the quarter.
Any accounting loss from the revaluation would be allocated to “other costs” on the company’s profit and loss statement for the period and could, therefore, impact earnings, although it would have no corresponding impact on cash flow for the period, explained Acacia.
The company expected 15% to 20% of its cost base to be denominated in Tanzanian shilling this year.
“Should the exchange rate remain at the current level, the company anticipates a marginal ongoing benefit to reported costs going forward,” it noted.
Acacia would announce its second-quarter and half-year earnings on July 27.
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