Results round-up

Acacia Mining reported a massive £710m loss after writing down the value of its assets due to a dispute with the government of Tanzania but has cut costs to "remain competitive" in 2018.

The FTSE 250 group's revenue of $751.5m for the calendar year was down 29% on the previous year as gold production decreased 27% after Tanzania's mining authorities banned the export of gold-copper concentrate last March. This ban meant the company was unable to export and sell 185,800 ounces of produced gold during the year.

With the ban still in place as Acacia's 64%-owning parent company Barrick Gold finalises a resolution with the Tanzanian government, Acacia switched production at its Buzwagi mine from concentrate to gold doré bars, which are not affected by the export ban.

As it still awaits detailed proposals from Barrick over a proposed agreement for Tanzania to share the economic benefits on a 50/50 basis, in the form of royalties, taxes and a 16% free carry interest in the operating mines, Acacia has written down the carrying values of its mining assets, though still hoped its application for international arbitration could lead to an alternative solution to be negotiated.

In light of the potential reduction in value of all three of its operating mines, Acacia has took a $850m gross impairment charge, including a net $632m for the Bulyanhulu mine due to its longer mine life and the delay to a return to positive cash generation after its move to reduced operations. This saw the gross profit of $293m lurch into the sizeable pre-tax loss.

In addition to the above net impairment, Acacia also raised an additional tax provision of $172m relating to the estimated uncertain tax positions for its operating companies, based on an estimate of the impact of a comprehensive settlement, which brings total tax provisions to $300m in line with Barrick's pledge for it to pay back taxes.

Year-end cash, as had already been revealed last month, shrank to $81m from $318m, with net cash of US$10m as the new year began and so directors have decided not to pay a dividend.

“We delivered resilient operational performance during a challenging 2017," said Peter Geleta, interim chief executive after former CEO Brad Gordon and chief financial officer Andrew Wray both jumped ship in November after Barrick shook hands on its agreement with Tanzanian president John Magufuli.

Geleta, previously Acacia’s head of organisational effectiveness and a former executive at Canada-based Barrick, said the action taken during the year, including wringing out an all-in sustaining cost of $875 per ounce that was below the guidance range and the lowest that Acacia has ever achieved, he believes "operations are now well placed to deliver in 2018".

He went on: "As expected, we will see a step-down in production in 2018 to 435,000-475,000 ounces as Buzwagi transitions to processing stockpiles and Bulyanhulu, whilst in reduced operations, solely re-processes tailings. Our continued cost discipline means that AISC will remain competitive at US$935-985 per ounce.

"Our focus remains on delivering optimal performance from all aspects of the business within our control in the current operating environment, returning the business to free cash generation and delivering value for all of our stakeholders. We are supporting efforts towards achieving a negotiated resolution with the Tanzanian government.”

Acacia shares fell more than 9% to 155.75p after over an hour of trading on Monday.

Lok'nStore confirmed that January saw the self-storage company reach its highest ever level of new storage sales.

The AIM-traded company reported 6.9% year-on-year growth in like-for-like revenue for the first half of the financial year, after stripping out the effects of the closure of the company’s Staines store and early trading in its Gillingham branch, which opened last month.

Furthermore, as of 31 January the company noted a 6% increase in unit occupancy and a 0.4% hike in price per let square foot compared to the same date 12 months prior. This growth is down slightly from the 6.5% increase in unit occupancy and 0.8% price hike per let square foot registered in the firm's year end results from July.

Chief executive Andrew Jacobs said: "Lok'nStore's successful execution of its strategy, pipeline of new landmark stores and strong balance sheet gives us confidence that the company can continue to deliver future growth."

On top of the new store in Gillingham and a flagship branch in Wellingborough set to open in March, the company has acquired a new site in Bournemouth and has plans for branches in Dover, Exeter, Bedford and Ipswich, all of which are hoped to be open by the end of FY2019.

"Our strong pipeline of six more landmark stores will add further momentum to sales and earnings growth. All six stores are in prominent locations with large catchment areas that demonstrate the company's ability to source high quality sites adding to future sales and earnings growth,” Jacobs said.