London-listed Acacia Mining, which has various operations in Tanzania, has posted an adjusted net loss of $7-million for the quarter ended March 31, compared with adjusted net earnings of $7-million in the first quarter of 2018.

It produced 104 899 oz of gold at an all-in sustaining cost (AISC) of $1 023/oz during the quarter, interim CEO Peter Geleta noted in an operational update released on Thursday.

Production at North Mara mine was lower than expected and 13% lower year-on-year following a fall-of-ground incident at the Gokona underground mine, which prevented access to higher-grade stopes, an excavator breakdown in the Nyabirama openpit, and the expected reduction in production at Buzwagi, following the transition to a lower-grade stockpile processing operation.

AISC was 5% higher year-on-year, primarily owing to the lower production base.

Acacia sold 104 985 oz, which was “broadly” in line with production.

The company generated revenue of $138-million, 12% lower than in the first quarter of 2018, with the lower sales base further impacted on by a lower average realised gold price.

Acacia’s earnings before interest, taxes, depreciation and amortisation decreased by 72% year-on-year to $24-million, as a result of the lower revenue and the impact of a $45-million gain on the sale of a noncore royalty.

Geleta outlined the steps taken to avert further production loses, including the introduction of revised mining plans for both Gokona and Nyabirama, targeting higher volumes, grades and productivity for the remainder of the year.

As such, Acacia anticipates a step-up in production in the second quarter with the higher production rate to be sustained throughout the second half of the year.

The company expects to meet its full-year guidance of between 500 000 oz and 550 000 oz at an AISC of between $860/oz and $920/oz.

It also noted that the Bulyanhulu optimisation study has progressed to its final stages, with the study continuing to support provisional outcomes for an average steady state production rate of 300 000 oz/y to 350 000 oz/y at an AISC of between $700/oz and $750/oz, over an indicative 18-year mine life.

LEGISLATIVE ENVIRONMENT   

In October 2018, the Tanzanian government brought criminal charges against three group companies, as well as three current Acacia employees and a former employee – three of those charged continue to be held under nonbailable offences.

Acacia denies all of the allegations made by the Tanzanian government.

The company noted that it continually engaged with, and supported, parent company Barrick Gold in its direct negotiations with the Tanzanian government throughout the quarter and remained committed to a negotiated resolution that is beneficial to all stakeholders.

Further, “Acacia is looking forward to receiving a detailed proposal for a comprehensive resolution of Acacia’s disputes with the [Tanzanian government], once Barrick’s negotiations have been successfully concluded.”

Meanwhile, in January, the North Mara mine received an environmental protection order (EPO) from the National Environment Management Council, requiring payment of a fine of $130 000, for alleged breaches of environmental regulations and alleged discharges of a hazardous substance from the mine.

Acacia noted that the mine was not provided with the supporting reports, findings or testing data regarding the alleged breaches of environmental regulations, adding that the reports of discharges were related to seepage from the tailings storage facility (TSF) –  an issue which was “well known” to both the company and the government.

North Mara paid the fine to avoid regulatory or other legal action in respect of the EPO. The mine’s technical team has continued to work with the government to address its concerns regarding seepage from the TSF, through the installation of additional pumps and the construction of additional containment infrastructure, to prevent seepage from entering the surrounding environment.

At the same time, the Tanzanian government issued a directive to North Mara to build a new TSF, and the mine is working with government on detailed plans and project schedules for the construction of the new facility.

Acacia expects a new TSF is likely to be an economically viable alternative to further expansions of the existing TSF at North Mara.

In March, the government directed the North Mara mine to resolve a separate issue that had resulted in the spillage of water into the local environment. Acacia reported that the spillage resulted from a security incident in which sections of the pipe used to transport water from the polishing pond to the TSF were either vandalised or stolen.

The incident led to the switching off of the pump, and the water level in the polishing pond subsequently overflowed.

Following remedial actions, the temporary overspill from the pond was stopped, and the mine then worked closely with the authorities to implement improvements to the security of the areas around the polishing pond to prevent any reoccurrences.