Acacia Mining Soars on Production Results
- By Alberto Abaterusso
Acacia Mining Plc (ACA.L) this morning released results on production for the third quarter and for the first nine months of fiscal 2018.
The results were mixed. Therefore, their impact on the market value of the stock over the coming days is very difficult to predict. The stock soared 3.5% to about $1.96 per share during trading on Monday.
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The intrinsic value of ACA.L
During the first nine months of fiscal 2018, operations were strong. The miner produced 391,000 ounces of gold and is now expecting to surpass the higher end of its full 2018 output guidance range. Acacia Mining projected 435,000 to 475,000 ounces of gold production for the entire year. The shareholders can now expect a gold production of about 500,000 ounces for the same span.
Instead, third quarter operations were scratched by the transitioning of the Buzwagi mine to a lower grade stockpile and by reduced underground mining at Bulyanhulu mineral deposit. The two assets are located in Tanzania.
The third producing mine of the company is the North Mara gold deposit, which is also located in Tanzania.
The company produced 136,640 ounces of gold in the third trimester, which was a 29% decline compared to the same quarter of fiscal 2017. Acacia Mining placed on the market 135,875 ounces of gold during the period.
In Tanzania, the company is still paying the consequences in terms of lower production for the ban that the government of Tanzania put in place because the company understated revenues in the past years. The African country prohibited the export of gold in concentrates. Consequently, the South African miner made some adjustments to its operations at Buzwagi and Bulyanhulu.
As of Sept. 30, 2018, the company has $117 million in cash on hand and securities. That was in line with the prior quarter.
Acacia Mining will issue the complete financial results for the quarter on Oct. 19. The company is a subsidiary of Barrick Gold Corp. (ABX), which has a 63.9% interest in the equity of Acacia Mining.
For the third trimester of 2018, analysts are estimating a loss of approximately $2.60 per share.
The stock has a market capitalization of about $770 million on the London Stock Exchange. The share price at close on Friday, Oct. 5, was about $1.89. For the 52-weeks through Oct. 5, the share price declined more than 24%. The share price is above the 200-, 100- and 50-day simple moving average lines.
The price-book ratio is 0.68 versus an industry median of 1.74 and an EV-to-EBITDA ratio of 1.9 versus an industry median of 9.3.
The trailing 12-month Ebitda margin is 37%, compared to an industry median of 23%.
The recommendation rating is 2.7 out of 5. The average target price is approximately $2.18.
Disclosure: I have no positions in any security mentioned in this article.
This article first appeared on GuruFocus.
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The intrinsic value of ACA.L
