Acacia Mining fights back against Tanzania discrepancy claims

Firing back a response to Tanzanian accusations that it under-declared gold exports, Acacia Mining has called for an independent review and said "we are considering all of our options".

The 277 of Acacia's containers held at Dar Es Salaam port contain, according to the company, 26,000 ounces of gold in total produced in one month from its Bulyanhulu and Buzwagi mines in the country.

But an audit of the containers commissioned by Tanzanian President John Magufuli claimed to have found gold content of 7.8 tonnes, or 250,000 ounces, which is almost exactly the same amount of gold in concentrate Acacia produced and sold from the two mines for the whole of 2016.

Acacia said if the committee's findings were correct it would imply that the company "is the world’s third largest gold producer" and "produces more gold from just three mines than companies like AngloGold Ashanti produce from 19 mines, Goldcorp from 11 mines, and Kinross from their 9 mines".

The FTSE 250 company, which has been prevented from exporting its containers since March over the government dispute, stressed that the amounts it has declared exactly match what it produces and sells, and that it pays, as agreed, a 4% royalty to Tanzania of all the gold, silver and copper contained in the concentrates.

Analysis of 20 years of data available to the company, by Acacia and other mining companies and their local experts, has not been able to reconcile the findings of the committee and has "consistently shown the gold content of the concentrates is less than one tenth of the committee’s findings".

Mining analysts in London also found the discrepancy hard to believe but have suggested the dispute may lead to an increased likelihood that the Bulyanhulu and Buzwagi mines may have to be closed, at least temporarily,

"Given the magnitude of this discrepancy we believe there should be an independent review of the content of the concentrates," Acacia said in a statement on Friday afternoon, confirming that it was taking an average daily loss of revenues of more than US$1m due to the export ban. At the end of March the company had net cash of $196m.

"As a result, we are considering all of our options."

The Tanzania ban does not affect Acacia's third mine in the country, North Mara, as it only produces gold doré.

Earlier in the week, analysts at Investec said "it sounds like someone in the committee has missed a decimal point somewhere along the line", while those at Numis said there is a chance Acacia could be cleared by any independent investigation, although they thought international litigation looks increasingly likely.

Numis' Jonathan Guy said: "Ultimately what the government wants is for ACA to resume exports but with adjustments to the amount of cash tax and royalties being paid."