Acacia Mining also reported a 50-percent drop in its Q1 2018 earnings thanks in part to reduced operations at its flagship gold mine in Tanzania.
The decline was due to reduced operations at its flagship gold mine in Tanzania amid a tax dispute with the government.
The company, which is a unit of Barrick Gold (TSX:ABX,NYSE:ABX) and is Tanzania’s largest gold miner, said production was down 45 percent from the previous year, landing at 120,981 ounces.
Despite the production decrease, Peter Geleta, interim CEO, stated, “the switch to stockpile processing at Buzwagi and the move to reduced operations at Bulyanhulu in late-2017 were effectively executed and we are pleased to report an increase in our cash balance to US$107 million.”
“We continue to take measures to further stabilise our balance sheet and continue to provide support to Barrick in its ongoing discussions with the Government of Tanzania,” he added.
Last year, the Tanzanian government accused the gold miner of operating illegally and evading taxes for years. The government noted that the company owed US$190 billion in taxes, penalties and interest for the period between 2000 and 2017.
The accusations were shut down by the company, but that did not stop its share price from sliding almost 40 percent after the report.
In the months following the allegations, Acacia made the decision to reduce operations at Bulyanhulu until the end of 2017.
Despite the ongoing tax dispute and reduction in output at its premiere mine, Acacia was able to meet its full-year targets, with output of between 435,000 and 475,000 ounces at a cost of US$935 to US$985 per ounce. That is down 38 percent from 2017.
Additionally, adjusted earnings before interest, taxes, depreciation and amortization for the three months to March 31 fell from US$82 million a year earlier to US$44 million.
As of 1:44 p.m. EST on Thursday (April 19), shares of Acacia Mining were down 13.21 percent, trading at GBX 134.70.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.