Acacia Mining fights back in Tanzania gold ore battle - Financial Times

Shares in Acacia Mining bounced 8 per cent on Friday after the crisis-hit miner fought back against accusations that it had misstated the value of its gold shipments from Tanzania by up to 10 times.

The London-listed company said the claims made by a presidential committee in the east African country this week that it was under-reporting exports from its Bulyanhulu and Buzwagi mines did not stand-up to scrutiny.

“If the committee’s published findings were based on accurate data, Bulyanhulu and Buzwagi would be the world’s two largest gold producers,” the company said in a statement.

“Given the magnitude of this discrepancy, we believe there should be an independent review.”

Acacia has not been able to export gold ore since March when the government of President John Magufuli blocked shipments of minerals in an effort to encourage more domestic processing of raw materials.

The company, which is majority owned by Canada’s Barrick Gold, says it is losing $1m a day as a result of the ban. Acacia mines the gold ore and then exports the powdered concentrate to facilities elsewhere for processing.

The company’s shares plunged 30 per cent on Wednesday as news of the presidential committee’s investigation came out. Even after Friday’s rebound they are still down 24 per cent this year, compared with a 10 per cent rise in the VanEck Vectors Gold Miners ETF.

Acacia said on Friday that two decades worth of “independently verified data” showed the gold content of its concentrates was consistently less than one-tenth of the committee’s findings.

“Based on more than 20 years of data available to us — which we will make available for any further analysis — we cannot reconcile these with the findings of the committee,” the company said.

It also said that it had not received a copy of the full report by the Tanzanian inquiry, as well as the “sampling protocol followed by the committee”.

Analysts said Acacia’s call for an independent review was likely to be ignored and it was increasingly likely that it would have to suspend operations at Bulyanhulu and Buzwagi, where it has had to stockpile the concentrate it cannot export.

“We continue to assume that both the government and Acacia are rational actors and that ultimately what the government wants is for Acacia to resume exports but with adjustments to the amount of cash tax and royalties being paid,” said Jonathan Guy, analyst at Numis Securities.

“Over the short term, however, we believe that there is the potential for the shares to continue to be volatile, especially if management does elect to suspend [production].”

On Thursday, Barrick Gold, which owns 64 per cent of Acacia, said it might be forced to revise its forecasts in light of the dispute. Acacia operations affected by the ban account for around 6 per cent of 2017 production guidance, it said.

Shares in Acacia closed up 7.48 per cent at 285.8p.