Acacia share prices fall as revenue drops in Q3

Acacia Mining PLC (LON:ACA) share price fell on Friday after the company announced a drop in revenue for the third quarter.

The mining company’s revenue in Q3 was $171 million, a drop of 40% compared to last year. Earnings before interest, tax, depreciation and amortization (EBITDA) also fell compared to last year, by 60%, to $50 million. Net profit was $16 million, falling 69.8% compared to last year when it was $53 million.

These results are largely in line with what was expected due to Acacia being caught up in a long-standing dispute with the Tanzanian government over taxes. The dispute had led to the government to ban exports of gold. The dispute, however, is nominally over. On the 19 October Barrick, Acacia’s parent company, announced it would split future economic benefits 50/50 with the Tanzanian government, as well as making a $300 million payment.

Acacia has said that “our business has continued to be resilient in the face of the challenges in Tanzania” and also highlighted the “progress in the discussions between Barrick Gold Corporation and the Government of Tanzania”.

These results contrast recent trends in the industry as Gold prices have recently risen and shares of both Sula Iron & Gold (LON:SULA) and Greatland Gold (LON:GGP) have increased recently. However, it is largely in line with what analysts expected due to the dispute leading to Acacia being unable to export around 30% of their production.

Acacia also announced that they have revised their expected annual production. Their original estimate was that they would produce 850,000-900,000 ounces, the company has slashed this to a revised amount of 750,000 ounces. This was largely due their “reduction in operating activity at Bulyanhulu”.

Analysts at Jefferies International have a price target of 195p for Acacia shares with a hold rating. Shares in Acacia are currently down 6.98% at the time of writing, trading at 197.20p.