The Acacia Mining PLC (LON:ACA) (ACA.L) share price has fallen over 4% today after it released a Q3 update. In spite of challenging conditions in Tanzania, the company delivered production of 181,203 ounces during the quarter. This was achieved at an all-in sustaining cost of $939 per ounce.
However, the company’s balance sheet has been negatively impacted by the restrictions on the export of gold/copper concentrate, as well as a lack of refunds for VAT. This has caused its cash position to fall to $95 million at the end of the quarter.
The company has been able to change the processing flow sheet at its Buzwagi mine to enable it to sell all of the gold it produces. It has also secured a $1300/oz floor price for the majority of gold sales until February 2018.
While there has been news of a framework agreement being signed in the discussions between Barrick Gold Corporation and the Tanzanian government, Acacia Mining has not yet received a formal proposal.
The company’s share price has fallen 57% in the last year as the disruption to its exports has hurt investor sentiment. This is a worse performance than other gold miners such as Centamin PLC (LON:CEY) (CEY.L), Randgold Resources Limited (LON:RRS) (RRS.L) and SolGold plc (LON:SOLG) (SOLG.L). Centamin is down 3%, Randgold Resources is up 5% and SolGold has gained 34% in the same 12 month period.
As an investor in Centamin and Randgold Resources, I’m optimistic about the prospects for the gold price. I think continued geo-political uncertainty could cause defensive assets to rise in popularity and this may improve the profitability of the wider sector. However, with Acacia having an uncertain future and there being good value opportunities elsewhere in the sector in my view, I’m not looking to buy it at the moment.